BP's contracts with SOCAR-KBR for two new projects in Azerbaijan valued at GBP 50 mln
BAKU. Aug 6 (Interfax) - The two contracts signed by BP plc with SOCAR-KBR LLC, a joint venture between the State Oil Company of the Azerbaijani Republic (SOCAR) and U.S. engineering company KBR, for two new projects in Azerbaijan are worth 50 million pounds, BP in Azerbaijan said in a statement.
It has been reported with reference to SOCAR-KBR that one of the contracts is to support the Sangachal Terminal Electrification (STEL) project, Azerbaijan's largest oil and gas reception terminal, and the other is for the Shah Deniz compression (SDC) gas field project. SOCAR-KBR will provide detailed engineering design solutions and procurement services for both projects.
The SDC project is estimated at GBP 43 million and entered into force on July 1, 2025. Work under this agreement is scheduled to be completed in 2026. The scope of work under the contract includes design, engineering and procurement for the construction of the SDC topsides, jacket and piles for the same platform, and onshore and offshore facilities (Shahdeniz Alpha, Shahdeniz Bravo and Sangachal Terminal), including integration with the subsea system, as well as preparation for installation, commissioning and operational readiness.
The STEL contract is valued at GBP 7 million and also went into effect on July 1. Work under this contract is scheduled for completion in 2028. The contract covers engineering design and procurement services for the installation of a number of new equipment and modifications to existing facilities at the Sangachal Terminal site to provide a safety mechanism for the transfer of power from the electrical grid and uninterruptible power supply.
BP, SOCAR Green and Azerbaijan Business Development Fund (ABDF) in June 2025 signed the final investment decision for the Shafag solar project which will enable construction of a 240MW AC solar plant in the Jabrayil district of Azerbaijan to begin. Construction of the $200 million Shafag solar plant are expected to commence this year and continue through mid-2027, utilizing primarily local resources. The Shafag project will be developed and managed by Lightsource bp, a company fully owned by BP. It is expected that the plant will generate 500 kWh of electricity per year.
BP, SOCAR and other shareholders and investors have greenlit the Sangachal terminal electrification (STEL) project, which will enable the terminal to connect with the national grid operated by AzerEnerji, via new facilities to be built both within and outside the terminal, including a new 220/110 kV electricity substation. Together, the Shafag and STEL projects are expected to support the reduction of operational emissions by around 50% over the future life of the Sangachal terminal.
The $230 million STEL project will be developed and managed by BP as operator of the Sangachal terminal. Construction of STEL should begin this year with completion expected in two stages - Stage 1 in mid-2027, and Stage 2 by the end of 2028.
Shareholders of the Shah Deniz field development project signed the final investment decision for SDC platform construction project on June 4. The $2.9 billion SDC project is expected to enable the production and export of approximately 50 billion cubic meters of additional gas and around 25 million barrels of additional condensate from the field. Construction of the new platform should begin in 2025 with commissioning in 2029.
The project aims to access low-pressure gas reserves and extract them with maximum recovery. It will capture low-pressure gas from certain reservoirs of the Shah Deniz field, compress it, and deliver it to the Sangachal terminal. Low-pressure gas will be supplied from the Alpha and Bravo platforms. The SDC platform is intended exclusively for compressor equipment, without drilling operations. The first low-pressure gas production from the Alpha platform is scheduled for June-July 2029, and from the Bravo platform for April-May 2030, according to the timeline.
The contract to develop the Shah Deniz field was signed in Baku in 1996. Equity participation in the contract is currently as follows: BP, operator, with 29.99%; Russia's Lukoil with 19.99%; Turkey's TPAO with 19%; Azerbaijan's Cenub Qaz Dehlizi with 16.02%; Iran's Nico with 10%; and Hungary's MVM Group with 5%.
Gas is currently produced at the Shah Deniz field at the Alpha platform in Stage 1 and at the Bravo platform in Stage 2. Gas production from the Shah Deniz field began in December 2006.
