By Leman Mammadova
Shah Deniz 2 is the starting point of the Southern Gas Corridor, which will deliver Caspian resources directly to European markets for the first time, through Italy, Georgia, Turkey, Greece, Bulgaria, Albania and the seabed of the Adriatic Sea.
French energy and gas company Engie, formerly GDF SUEZ, has partially transferred its contract for the purchase of gas within the second stage of development of the Shah Deniz field to Shell Energy Europe Limited.
The two companies signed an agreement with the Shah Deniz consortium in 2013 to sell Azerbaijani gas to Europe as part of the second stage of development of the Shah Deniz field.
Under the agreement, signed on September 5, Shell Energy Europe Limited acquires part of the rights to Engie’s 25-year contract, signed with the Shah Deniz consortium. The agreement was reached between Engie, Shell, Azerbaijan Gas Supply Company (AGSC) and SOCAR.
The new agreement provides for the transportation of Azerbaijani gas to Italy after the completion of the Trans-Adriatic Gas Pipeline (TAP) project.
The new deal will increase Shell Energy Europe Limited’s access to natural gas. However, Engie will remain an important buyer of Shah Deniz gas, dynamically optimizing its long-term position.
Shah Deniz consortium signed agreements with nine companies, including Gas Natural Fenosa, Depa, E.On, GDF-Suez, Hera Trading, Axpo, Enel, Shell and Bulgargaz, to sell Azerbaijani gas to Europe as part of the second stage of development of the Shah Deniz field on September 5.
The agreements are designed for 25 years and provide for the supply of 10 billion cubic meters of gas per year to Italy, Greece and Bulgaria.
Eight billion cubic meters of gas per year will be supplied to Italy, and one billion cubic meters each – to Greece and Bulgaria.
Shah Deniz field covers approximately 860 square kilometers. The field was discovered in 1999. Shah Deniz is a giant gas condensate field, reserves of which are estimated at 1.2 trillion cubic meters of gas and 240 million tons of condensates.
Currently, gas production from the Shah Deniz field is carried out from the Alfa platform as part of Stage 1 and from the Bravo platform as part of Stage 2. Within the second stage of field development, the volume of gas production can be increased to 24 billion cubic meters per year, according to forecasts.
The agreement on the exploration, development and shared production of promising areas of Shah Deniz was signed on June 4, 1996. The project participants are BP (operator - 28.8 percent), AzSD (10 percent), SGC Upstream (6.7 percent), Petronas (15.5 percent), LUKOIL (10 percent), NİKO (10 percent) and TPAO (19 percent).
Azerbaijan will supply Shah Deniz gas to European markets via the Trans Adriatic Pipeline (TAP), which is the main part of the Southern Gas Corridor.
TAP gas pipeline, which is currently under construction, will be operational in early 2020. The initial capacity of TAP will be 10 billion cubic meters of gas per year with the possibility of doubling it. TAP shareholders include BP (20 percent), SOCAR (20 percent), Snam S.p.A. (20 percent), Fluxys (19 percent), Enagas (16 percent) and Axpo (5 percent).