The BP-led consortium developing the giant Shah Deniz natural gas field in Azerbaijan's Caspian Sea said Thursday it has clinched deals valued at more than $100 billion to sell gas from the project direct into Europe.
The BP-led consortium developing the giant Shah Deniz natural gas field
in
Azerbaijan
's
Caspian
Sea
said Thursday it has clinched deals valued at more than $100 billion to
sell gas from the project direct into
Europe
.
The agreements pave the way for Azeri gas to flow directly via pipelines into
European markets for the first time, helping to strengthen the region's energy
security by diversifying supplies and reducing dependence on Russian gas
imports.
The 25-year gas-sales contracts with utilities and gas-trading companies remove
one of the last big hurdles in the $40 billion project for BP PLC (BP) and its
partners, in the run up to the final investment decision for Shah Deniz II, due
by the end of this year.
The deals are valued at more than $100 billion over the lifetime of the
contracts.
"The strong demand for Shah Deniz gas gives us confidence in the long-term
development of
Azerbaijan
's gas
resources," said Gordon Birrell, regional president for BP in
Azerbaijan
,
Georgia
and
Turkey
.
The nine utilities and gas-trading companies who have agreed to buy the gas
include Enel SpA (ENEL.MI) of Italy, E.ON AG (EOAN.XE) of Germany, GDF Suez SA
(GSZ.FR) of
France
, the
energy trading arm of Royal Dutch Shell PLC (RDSA), Hera Trading and DEPA Public
Gas Corp. of
Greece
.
Of the total 10 billion cubic meters of gas a year the companies have pledged
to take, around 2 billion cubic meters will go to buyers intending to supply
Bulgaria
and
Greece
, with
the rest going to buyers intending to supply
Italy
and
adjacent market hubs.
During the selection process, the Shah Deniz consortium received offers for
between three to four times the volume of available gas from different buyers
across central and southeastern
Europe
, said
Al Cook, BP's vice president for Shah Deniz.
"This gives us quite a lot of confidence that future projects in
Azerbaijan
get
developed," he said, referring to ACG Deep--a layer of gas beneath the
offshore
Azerbaijan
oil
fields that BP and other companies are developing--and Shafag-Asiman also in
the Azeri sector of the
Caspian Sea
,
where BP is exploring.
The first gas from the second phase of Shah Deniz is set to flow into
Turkey
in
2018 and into
Europe
by 2019 as more wells are
brought onstream and production from the field is increased.
Ahead of the final investment decision, due by the end of this year, the
consortium has to finalize the engineering plans for the second phase of Shah
Deniz and the expansion of the South Caucasus Pipeline that will carry the gas
through Azerbaijan and Georgia to Turkey.
The group also has to conclude engineering, permitting and shareholder
agreements in the TANAP pipeline through
Turkey
and
get the final commercial arrangements and intergovernmental agreements in place
for the TAP pipeline that will take the gas from
Turkey
into
Greece
,
Albania
and
Italy
.
BP is operator of the Shah Deniz consortium that includes Statoil ASA (STO),
Azerbaijan
's
state oil company SOCAR, Total SA (TOT)of
France
,
Russia
's
Lukoil (LKOH.RS) and
Turkey
's
TPAO.
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