BP part of new Azerbaijan gas supply contract

Suzie Neuwirth
OIL MAJORS including BP and Statoil are part of a consortium that yesterday unveiled a new multi-billion pound sales agreement that would bring gas directly from Azerbaijan to Europe for the first time.

Just over 10bn cubic metres a year of gas will be produced from the Shah Deniz field in Azerbaijan each year, in a deal valued at around $100bn (£62.3bn) over the 25-year lifetime of the contract.

The project will develop a new transport network, including 500km of subsea pipelines, so that 16bn cubic metres of gas will be delivered through over 3500km of pipelines through Azerbaijan, Georgia, Turkey, Greece, Bulgaria, Albania and under the Adriatic Sea to Italy, although the project is expandable.

FTSE 100-listed BP owns a 25.5 per cent stake in the venture, as does Norwegian oil giant Statoil. The other operators in the venture are Azerbaijan state company Socar, France’s Total, Russian firm Lukoil, Iran’s Nico and Turkey’s TPAO.

A final investment decision will be made on the new project by the end of the year. Nine energy companies have agreed to buy the gas, including E.On, Shell and Enel.

“These agreements mark the biggest gas sales in the history of Azerbaijan,” said Rovnag Abdullayev, president of Socar. “They also mark the beginning of direct links between Azerbaijan’s huge gas resources and the European markets…I am sure that this cooperation will bring benefits to consumers across Europe and will play an important role in strengthening European energy security.”

Gordon Birrell, regional president for BP in Azerbaijan, Georgia and Turkey, and president of the consortium, said: “The strong demand for Shah Deniz gas gives us confidence in the long-term development of Azerbaijan’s gas resources.”