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04.11.2014 11:46

BP issues over $9.5b worth of contracts within its part of the Shah Deniz-2 project

BP has issued $9.6 billion worth of contracts to contractors within its operated part of the Shah Deniz 2 project, head of the BP-Azerbaijan company Gordon Birrell told reporters on Oct.29.

BP company is the operator of the project for the development of the Shah Deniz gas condensate field.

Birrell said that the total expenditure for Shah Deniz 2 in 2014 is expected to be roughly $4.5 billion, with much of that amount to be spent with companies that have a local partner.

"The objective is to deliver first gas from Shah Deniz 2 into the Southern Gas Corridor in 2018," said Birrell. "We have just finished drilling the fifth production well offshore."

He added that this is a huge project that extends for over a 5-year period.

Annual production of gas will increase from 9 billion cubic meters (the first phase) by an additional 16 billion cubic meters in the second phase within the framework of the Shah Deniz project. Two offshore platforms will be installed and more than 20 underwater wells will be drilled for additional production of 16 billion cubic meters of gas per year under the Shah Deniz-2.

The gas to be produced as part of the Stage 2 of the field's development will be exported to Turkey and to the European markets by means of expanding the South Caucasus Pipeline and construction of the Trans-Anatolian Gas Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP).

The contract for development of the Shah Deniz offshore field, which has proven reserve of 1.2 trillion cubic meters of gas, was signed on June 4, 1996.

In 2013, Shah Deniz produced 9.8 billion cubic meters of gas and 2.48 million metric tons of condensate (19.6 million barrels) against 7.73 billion cubic meters of gas and 2 million metric tons of condensate in 2012.

The shareholders are: BP, operator (28.8 percent), Statoil (15.5 percent), NICO (10 percent), Total (10 percent), Lukoil (10 percent), TPAO (9 percent) and SOCAR (16.7 percent). These percentages include the recent purchases of equity from Statoil by BP and SOCAR.

Earlier, Total has entered into an agreement to sell its interest in Shah Deniz to TPAO. After the transaction is over, the share of the latter in the project will be 19 percent.

Moreover, Norways Statoil company has sold its 15.5-percent share in the Shah Deniz project, to the Malaysian oil and gas company Petronas. The transaction is expected to be closed early.

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