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Germany to provide loan guarantee for supply of Azerbaijani gas to Europe

6 March 2018 14:31 (UTC+04:00)
Germany to provide loan guarantee for supply of Azerbaijani gas to Europe

By Rashid Shirinov

German government intends to provide loan guarantee of $1.5 billion to Azerbaijani state-owned enterprise through a German bank for ensuring gas supply from Azerbaijan, German public broadcaster Deutsche Welle (DW) has reported.

The report refers to the letter from the Parliamentary State Secretary at Germany’s Finance Ministry Jens Spahn to the chairman of the Bundestag’s budget committee Peter Boehringer, which says that the loan will amount to $1.5 billion.

These gas supplies should make a significant contribution to providing Europe and Germany with gas.

The contracts on the purchase of Azerbaijani gas from the second phase of Shah Deniz field development (Shah Deniz-2 project) were signed in September 2013 with Shell, Bulgar gas, Gas Natural Fenosa, E.ON, Gaz de France, Hera, Enel, Axpo and DEPA companies. These 25-year agreements prescribe sale of 10 billion cubic meters of gas per year.

Since January 1, 2016, the Uniper energy company separated from German E.ON. The gas trading business is now in the responsibility of Uniper. The company will purchase a total of 40 billion cubic meters of gas in accordance with the agreement on the purchase of Azerbaijani gas from the Shah Deniz field.

The Shah Deniz Stage 2 project is set to bring gas directly from Azerbaijan to Europe for the first time, opening up the Southern Gas Corridor.

The SGC is one of the priority energy projects for the European Union, which aims to diversify routes and sources of energy supplies and thereby improve the energy security of the EU.

Gas as part of the second phase of Shah Deniz field development will be exported to Turkey and the European markets through the expansion of the South Caucasus gas pipeline and the construction of the TANAP and TAP gas pipelines.

The first gas within the Shah Deniz-2 project will be delivered to Turkey in 2018, and to Europe in 2019. The cost of the Southern Gas Corridor project is estimated at $40 billion.

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Rashid Shirinov is AzerNews’ staff journalist, follow him on Twitter: @RashidShirinov

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