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BP, Socar, Statoil and Total make decision in Azerbaijan Shah Deniz

Shah Deniz Stage-2 to go for Full Field Development

The London-based BP and its partners, Statoil from Norway, the State Oil Company of Azerbaijan (SOCAR), Total from France, Lukoil from Russia, the National Iran Oil Company (NIOC), and Türkiye Petrolleri Anonim Ortaklığı (TPAO) from Turkey, have made the final investment decision (FID) for the Shah Deniz Stage-2 project  in Azerbaijan.

Located approximately 70 kilometers southeast of Baku by 600 meters of water depth in the Caspian Sea, Shah Deniz is the largest gas and condensate field known in Azerbaijan. 

BP_Statoil_Total_SOCAR_NIOC_TPAO_Lukoil_Shah-Deniz-Stage-2_MapShah Deniz Stage-1 started production in 2006 and since then it delivers 860 million cubic feet per day (cf/d) of natural gas.

With the Shah Deniz Stage-2, BP and its partners are proceeding to the Shah Deniz full field development (FFD) in order to add 1,600 million cf/d of gas .

In making this FID on the Shah Deniz Stage-2 development, BP and its partners agreed on a cascade of additional projects to:

 – Double the South Caucasus Pipeline (SPC) across Azerbaijan and Georgia

 – Build the Trans Anatolian Gas Pipeline (TANAP) through Turkey

 – Construct the Trans Adriatic Pipeline (TAP) from Turkey to Italy through Greece and Albania

The whole project will require $45 billion capital expenditure out of which the Shah Deniz Stage-2 and the SPC projects will represent $28 billion investment.

Despite the size these projects and the quantity of gas exported to Europe, the Shah Deniz full field development will represent only 2% of the European natural gas consumption.

BP Southern Gas Corridor to supply south Europe

But the selection of this Southern Gas Corridor to Europe has been decided in expecting additional sources of supply coming from other fields in Azerbaijan, but also from the north of Iraq and later on from Iran.

Because of the giant size of each individual projects,BP and its partners have taken different stakes in each section.

Statoil has decided to sell 10% shares in the Shah Deniz and SCP projects, so that BP remains the operator with working interests such as:

BP_SOCAR_Total_TPAO_TANAP-TAP_Southern-Gas-Corridor_ – BP 28.8%

 – SOCAR 16.7%

 – Statoil 15.5%

 – Lukoil 10%.

 – NIOC 10%

 –Total 10%

 – TPAO 9%

In parallel Statoil will take 20% share in TAP project but will stand out of TANAP project.

The challenges of the Shah Deniz Stage-2 project relies not only in its size and location but also in the high pressure and high temperature of the reservoir.

For this Shah Deniz full field development, BP and its partners are planning to build:

BP_SOCAR_Statoil_Total_TPAO_Lukoil_Shah_Deniz_Stage-2 – Two offshore bridge-linked platforms

 – 26 drilling wells

 – Gas gathering systems with 500 kilometers of subsea pipelines

 – Additional gas central processing facilities at the existing Sangachal terminal

In making the final investment decision  now, BP and its partners, Statoil, SOCAR, Total, Lukoil, NIOC, and TPAO are targeting the first production in 2018 with first deliveries in Europe through the TANAP and TAP pipelines projects in 2019.

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer

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