Cistran Finance Exploring the Spirit of Capitalism's New Frontier

Wednesday, July 18, 2018

Shah Deniz gas project receives $750 million contract from BP-led consortium

BP recently awarded a $750 million construction and supply contract to help to develop the Shah Deniz II gas field in Azerbaijan.

The project is meant to allow European nations to reduce their reliance on Russian gas. Shah Deniz, Azerbaijan's biggest gas field, is being developed by a group of partners that includes BP, Statoil and the State Oil Company of Azerbaijan Republic, Reuters reports.

Shah Deniz I became operational in 2006 and has an annual production capacity of about 10 billion cubic meters of natural gas. Shah Deniz II is expected to produce 16 bcm of gas per year starting in 2019, with 10 bcm earmarked for Europe and 6 bcm for Turkey.

Gazprom currently covers a quarter of Europe's gas needs, with more than 150 bcm of annual exports.

Alternative supplies have come under scrutiny given Ukraine's political upheaval, as 40 percent of gas imported to Europe from Russia is pumped across Ukraine.

"The use of this technology in Azerbaijan will open up new opportunities for oil and gas developments," Gordon Birrell, the president for BP's Azerbaijan-Georgia-Turkey region, said, according to Reuters.

The Shah Deniz consortium signed a $974 million contract in December with a consortium including Tekfen Insaat, a Turkish construction firm, to build two offshore platforms for the project. The consortium also awarded construction and engineering contracts worth $841 million and a contract for the supply of the subsea production systems worth $394 million earlier in 2014, Reuters reports.