Shah Deniz consortium inks Stage-2 gas sales contracts with 9 cos
BAKU. Sept 19 (Interfax) - The Shah Deniz consortium signed contracts for the sale in Europe of Azerbaijani gas from Stage-2 Shah Deniz deposit development with nine companies on Thursday, an Interfax correspondent reported.
The companies are Gas Natural Fenosa, Depa, E.On, GDF-Suez, Hera Trading, Axpo, Enel, Shell, and Bulgargaz.
The president of State Oil Company of the Azerbaijani Republic (SOCAR), Rovnag Abdullayev, said during the signing ceremonies that these contracts mean $200 billion in revenues for Azerbaijan.
"We're confident that our cooperation will continue in the future. In the future, there can be delivered to Europe gas that is extracted not only at the Shah Deniz deposits, but at other gas deposits in Azerbaijan at which prospecting work is now being done," Abdullayev said. "Azerbaijan has big gas resources, including the deposits Apsheron, Umid, deep-lying gas at the Azeri-Chirag-Gunashli block, and also the promising structures Babek, Shafar-Asiman," he said.
The consortium has already agreed the terms for gas sales with a number of buyers from Italy, Greece and Bulgaria. Abdullayev said that the agreements are valid for 25 years and envision the delivery of ten billion cubic meters (bcm) a year to Italy, Greece, and Bulgaria. "We believe that implementing these agreements will provide a unique opportunity to enter to markets of other European countries," he said.
The Shah Deniz consortium on June 28 officially announced the Trans Adriatic Pipeline, or TAP, construction project for exporting Shah Deniz deposit Stage-2 development gas to Europe. The consortium had also been looking at the competing Nabucco West pipeline project.
SOCAR, BP and Total acquired stakes in the project to build TAP in July after exercising their options to join TAP AG. SOCAR and BP each took a 20% stake, while Total has acquired 10%. In addition, Fluxys, a gas transit operator in Europe, opted to join TAP, taking a 16% stake in the project.
TAP's shareholders are now BP with 20%, SOCAR with 20%, Statoil with 20%, Fluxys with 16%, Total with 10%, E.ON with 9% and Axpo with 5%. Previously, Axpo and Statoil each held 42.5% and E.ON held 15%.
The contract to develop Shah Deniz was signed on June 4, 1996 in Baku and ratified by the Milli Majlis (parliament) on October 17 of that year. The Shah Deniz project members are BP (operator, 25.5%), Statoil (25.5%), State Oil Company of the Azerbaijani Republic (Socar) (10%), Lukoil (10%), Nico (10%), Total (10%), and TPAO (9%). Stage-2 gas production is planned for 2018. Annual production will run to 16 bcm, of which 10 bcm will be piped to Europe and 6 bcm to Western regions of Turkey. The supplies to Europe should begin in 2019.
Stage-2 project costs are estimated at $28 billion.
