Azernews.Az

By Sara Israfilbayova

The European Bank for Reconstruction and Development (EBRD), providing project finance for industries and businesses, expects Azerbaijan’s economy to grow 2 percent in 2018.

An updated Regional Economic Prospects report says that the start of gas production within the Shah Deniz-2 project will support the growth of Azerbaijan’s economy next year.

The Shah Deniz, discovered in 1999, is one of the world’s largest gas-condensate fields, which reserves are estimated at 1.2 trillion cubic meters of gas. The field is located on the deep water shelf of the Caspian Sea, 70 km south-east of Baku, in water depths ranging from 50 to 500 m.

Shah Deniz field's Shah Deniz-2 is a giant project that will add a further 16 billion cubic meters per year (bcma) of gas production to the approximately 9 bcma produced by Shah Deniz Stage 1.

One of the largest gas developments in the world, the field will help increase European energy security by bringing Caspian gas resources to markets in Europe for the very first time. Shah Deniz gas will travel 3,500 kilometres, to elevations of over 2,500 metres, and over 800 metres below the sea.

As for this year, the bank’s analysts expect Azerbaijan’s economy to shrink 0.5 percent. The EBRD has kept its expectations regarding the development of the country’s economy as in the bank’s May report.

“Growth in eastern Europe and the Caucasus as a whole is expected to pick up from near zero to close to 1.5 percent in 2017 as headwinds from low commodity prices and the earlier recession in Russia subside,” said the report. “A gradual recovery in the region is set to continue in 2018.”

The EBRD’s forecast for 2018 exceeds expectations of Azerbaijani government. The Azerbaijani government expects Azerbaijan’s real GDP to grow 1.5 percent in 2018. For 2017, the government expects the country’s economy to grow 0.3 percent.

The EBRD is an international financial institution founded in 1991. The bank has allocated about €2.8 billion to Azerbaijan for implementation of 161 projects since 1992.

One of the main priorities of the EBRD in Azerbaijan for 2017 is support the local corporate with direct financing. The institute continues to pursue investments in energy projects, especially where there is a gap to improve efficiency and energy security.

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