Azerbaijan to manage energy projects more effectively
By Aynur Jafarova
Azerbaijani President Ilham Aliyev signed a decree on February 25 on the establishment of a closed joint-stock company (CJSC) for effective management of energy projects.
The decree concerns projects related to the second stage development of giant Shah Deniz field and expansion of the South Caucasus Pipeline, Trans-Anatolian (TANAP) Pipeline, and the Trans-Adriatic (TAP) pipeline.
Given the state commission's proposals for the effective management of these projects, the state energy company SOCAR will establish a closed joint stock company (51 percent state-owned and 49 percent owned by SOCAR) with an authorized capital of $100 million, the decree says. SOCAR should also ensure the transfer of shares to the newly created CJSC.
State oil fund SOFAZ has been instructed to provide an equity financing for the CJSC. The funds that will be provided to the CJSC for financing the equity will provide a long-term investment on return conditions.
SOFAZ will be represented at the CJSC's Supervisory Board by its representatives, chosen by the state commission.
The ownership and management of the CJSC's shares will be conducted by the Economy and Industry Ministry, while the dividends on those shares will be transferred to SOFAZ.
The CJSC's proceeds received from all the projects will be transferred to SOFAZ until all the fund invested in the joint stock company are paid back.
The state commission, which was established by presidential order in October 2013, has been instructed to settle any issues raised in this decree.
The gas that will be produced in the second stage of Azerbaijan's Shah Deniz field development will be the main source of the Southern Gas Corridor. The Corridor envisages the transportation of Caspian gas to European markets.
Shah Deniz, estimated to contain 1.2 trillion cubic meters of gas, is operated by the London-based BP, with SOCAR, Statoil, Total, Lukoil, NICO, and TPAO as partners. They extended the Shah Deniz contract for five years, till 2036.
TAP, which is designed to supply the Caspian gas to
Europe, will transport natural gas from the giant Shah Deniz II
field in Azerbaijan to Europe. The approximately 870 km long
pipeline will connect to TANAP near the Turkish-Greek border at
Kipoi, cross Greece and Albania and the Adriatic Sea, and come to
Southern Italy.
TAP's routing can facilitate gas supply to several South Eastern
European countries, including Bulgaria, Albania, Bosnia and
Herzegovina, Montenegro, Croatia, and others. TAP's landfall in
Italy provides multiple opportunities for further transport of
Caspian natural gas to large European markets such as Germany,
France, the UK, Switzerland, and Austria.
The TANAP project, developed by Azerbaijan's SOCAR in collaboration with the Turkish state pipeline company Botas and the energy company TPAO, will deliver Shah Deniz gas to the Turkish-Greek border from eastern Turkey. The initial capacity of the pipeline will be 16 billion cubic meters of gas a year. TANAP will link up with TAP on the Turkish-Greek border.
The over 700-kilometer South Caucasus Pipeline (Baku-Tbilisi-Erzurum pipeline) transports gas produced from the Shah Deniz gas condensate field located in the Azerbaijani sector of the Caspian Sea. The gas is supplied to Georgia and Turkey.
Azerbaijan will act as a buyer of the gas as well.
The BTE pipeline will be expanded with an increased capacity of 25 billion cubic meters of gas per year after 2017. In later stages, the volume of gas which will to be transported via this route will be increased to 45 billion cubic meters.