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BP’s Azerbaijan Gas Project Will Cost $18 Billion

BP Rig

BP has revealed the cost of its contracts in the second phase of its development of the offshore Shah Deniz gas and condensate field in Azerbaijan, and the expansion of the South Caucasus pipeline. A message from the company stated that the contracts are worth approximately $18 billion. The project is on schedule and is about 82 percent complete.

The Shah Deniz field is thought to be home to 1.2 trillion cubic meters of natural gas and an estimated 240 million tons of condensate.

The second phase of the Shah Deniz development will entail delivering gas to markets in Turkey and Europe via the expanded South Caucasus pipeline, and the construction of the Trans-Anatolian Natural Gas Pipeline and the Trans-Adriatic Pipeline. Once the second phase of the project is implemented, gas output from the region should be boosted from 9 billion cubic meters per year to 16 billion cubic meters.

According to BP, the pipe-lay barge Isafil Huseynov has completed the installation of the first flowline from the Shah Deniz field from the North Flank cluster to the platform location, and is in the process of installing a second flowline before it moves to the West Flank where it will install two more flowlines. The subsea construction ship Khankendi will be deployed to the Shah Deniz 2 area to build the necessary infrastructure. The Khankendi is being prepared for commissioning and certification.

The contracts for the Shah Deniz development were signed back on June 4, 1996. BP owns 28.8 percent of the project, and AzSD holds 10 percent. Other shareholders include SGC Upstream at 6.7 percent, Petronas which holds 15.5 percent, Lukoil and NIOC which hold 10 percent each; and TPAO which owns 19 percent of the project. The effort to expand the Sangachal oil and gas terminal is also moving ahead according to schedule.

By Lincoln Brown for Oilprice.com

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