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 respectively, 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 in place. 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; and expansion of the 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 project is estimated to cost $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
The Shah Deniz consortium announced the final investment decision (FID) for the Stage 2 development of the Shah Deniz gasfield in December 2013.

The decision means that gas sales contracts with nine European companies will now come into effect. As a result, an estimated ten-billion cubic metres a year of Shah Deniz gas are expected to be delivered for 25 years to customers in Italy, Greece and Bulgaria.

Further, about six-billion cubic metres a year of Shah Deniz Stage 2 gas will be delivered to consumers in Turkey. All gas sales and transportation contracts will be managed by the Azerbaijan Gas Supply Company established by Shah Deniz co-ventures under the operatorship of Socar.

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.