Name and Location
Shah Deniz gasfield Stage 2 development project, off the coast of Azerbaijan.

Client
The Shah Deniz co-venturers are, after acquisitions, BP (operator) with 28.8%, Socar (16.7%), Statoil (15.5%), Total (10%), Lukoil (10%), Nico (10%) and TPAO (9%). These percentages include the equity bought from Statoil by BP and Socar, which are subject to conditions that are expected to be met in 2014 for completion of the transactions.

Project Description
The Shah Deniz gasfield is estimated to contain 0.9-trillion cubic metres of gas.

There are additional shallow and deep reservoirs that could increase the gas in-place volumes to 1.4-trillion cubic metres.

The field is being developed in stages.

Stage 1 involved the construction of a single platform, with pipelines back to Sangachal Terminal, near Baku. It is currently a world-class asset, producing more than nine-billion cubic metres a year of gas and about 55 000 bbl/d of condensate.

The Stage 2 project will provide gas from the Caspian Sea to markets in Turkey and Europe, opening up the Southern Gas Corridor. The Stage 2 development and Southern Gas Corridor pipeline projects represent one of the largest and most complex endeavours yet undertaken by the global oil and gas industry.

Stage 2 will focus on the remaining resource potential in the producing reservoir intervals, adding 16-billion cubic metres a year of gas and increasing condensate production to 120 000 bbl/d.

The gas produced from the Shah Deniz field will be transported about 3 500 km to provide energy for millions of consumers in Georgia, Turkey, Greece, Bulgaria and Italy.

Stage 2 is expected to include two new bridge-linked production platforms; 26 subsea wells to be drilled, with two semisubmersible rigs; 500 km of subsea pipelines built in water depths of about 550 m; a 16-billion-cubic-metre-a-year upgrade for the South Caucasus pipeline expansion (SCPX); and expansion of Sangachal Terminal.

Further pipelines will be built and expanded to transport Shah Deniz gas through Turkey and Europe.

The Shah Deniz partners have a long-term vision for a new Stage 3 development that would achieve enhanced recovery factors for the Shah Deniz field. This vision is based on a new exploration well drilled by BP in 2007 – the deepest ever drilled in the Caspian Sea. The discovery of a new high-pressure reservoir presents an exciting new future for the field beyond Stage 2; however, given the high pressure of the new reservoirs, new technology and new exploration will be needed to develop these resources.

Value
The estimated cost is $25-billion.

Duration
First gas is targeted for late 2018, with sales to Georgia and Turkey; first deliveries to Europe will follow about one year later.

Latest Developments
Since the beginning of 2014, several key Stage 2 contracts have been awarded following the three major contracts, which were announced in December 2013. These include:
• The $528-million contract for the construction and commissioning support of the SCPX project facilities in Georgia awarded to the Bechtel Enka joint venture, which comprises Bechtel International and ENKA İnşaat ve Sanayi. The scope of work includes construction of a 16 km access road, two 120 MW compressor stations and a pressure reduction and metering station. Completion is expected in 2018.
• The contract for pipeline and facilities engineering and project management services for the SCPX project has been awarded to Chicago Bridge & Iron UK (CB&I). The value of this contract is $174-million and completion is expected in 2018.
• The contract for the initial phase of the subsea and pipeline engineering and project management services, amounting to $57-million, has been awarded to Wood Group Kenny (WGK).
• The contract for engineering, procurement and construction of the offshore platform living quarters has been awarded to Apply Emtunga. The $32- million contract should be completed in 2017. Assembly and commissioning of the living quarters will be carried out at the ATA fabrication yard in Bibi-Heybat, near Baku, where topsides units of the platforms will be constructed using local resources.
• The $26-million contract for horizontal directional drilling and line pipe installation for five river crossings of the SCPX project has been awarded to DrillTec.
Completion is expected in 2016.
• The contract for shaft and tunnel construction and line pipe installation for the two river crossings of the SCPX project – one in Azerbaijan and one in Georgia – has been awarded to CSM Bessac. This $24-million contract is expected to be completed in 2017.

These contract awards complement progress across the Southern Gas Corridor projects. Offshore, the Istiglal drilling rig has completed drilling the most recent well in the northern part of the field. Five production wells have now been drilled. An upgrade and recertification programme has been successfully completed on the Heydar Aliyev rig, which has now returned to drilling activities in the western part of the field. These two rigs will remain working on the Shah Deniz field to deliver all the wells required to ramp up production to the planned plateau level of 16-billion cubic metres a year.

Additionally, the first consignments of steel for fabrication of the platform jackets arrived in Baku in December 2013 and, in February 2014, the first steel for fabrication of the platform decks arrived at the ATA fabrication yard in Bibi-Heybat, near Baku. The $974-million contract for fabrication, load-out and offshore hook-up and commissioning of the topsides units of the two Stage 2 platforms is being undertaken by the Amec-Tekfen-Azfen (ATA) consortium, which comprises Amec  MMC, Tekfen Insaat ve Tesisat and Azfen.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Socar press office, Nizameddin Guliyev, tel +994 12 521 0129.
BP press office, Tamam Bayatly, tel +994 12 437 7573.
Bechtel International, tel +1 415 768 1234 or fax +1 415 768 9038.
ENKA İnşaat ve Sanayi, tel +90 212 376 10 00, fax +90 212 272 88 69 or email enka@enka.com.
CB&I, tel +1 832 513 1000.
WGK, tel +44 1784 417200 or fax +44 1784 417251.
Apply Emtunga, email info@emtunga.com.
DrillTec, tel +1 713 895 9852 or fax +1 713 895 7616.
CSM Bessac, tel +33 5 61 37 63 63 or fax +33 5 61 09 26 29.
Amec, Frank Stokes, tel +44 1452 876975 or email frank.stokes@amec.com.
Tekfen Insaat ve Tesisat, tel +90 212 359 35 00 or fax +90 212 359 35 08.
Azfen, tel +99412 492 57 25, fax +99412 492 57 27 or email azfen@azfen.com.