Azernews.Az

BAKU – A new $3 billion pipeline will be built to transport gas from Azerbaijan to world markets given increasing production levels, BP Azerbaijan President Rashid Javanshir has said.

The conduit is to pump 16 billion cubic meters of gas per year during Stage 1 of full field development at the country’s largest gas-condensate field in the Caspian Sea, Shahdaniz, which will boost annual gas output to 24bn cubic meters and open up Azerbaijan as a major gas supplier to new gas markets.

Javanshir told a news conference Tuesday that the new 400 km line in Azerbaijan will extend to the border with Georgia. Also, two new compression stations will be built in Georgia. The new pipeline will be linked to the South Caucasus Pipeline (SCP), a section of the Baku-Tbilisi-Erzurum (BTE) pipeline stretching to Turkey.

The BTE pipeline has so far been used to export Shahdaniz gas produced during Stage 1 of the project.

According to Javanshir, about $20 billion will be spent on Stage 2 of Shahdaniz development.

He said the Azerbaijani government has offered to sell gas to be extracted during this stage to a number of European countries. Over 20 countries and major companies have expressed readiness to negotiate with Azerbaijan. The talks will continue through the first quarter of 2011.

"Everything depends on this," Javanshir said. "If we manage to finalize the talks, project work will be continued on that basis, and the project plans to deliver first gas in 2017."

According to BP Azerbaijan’s report issued on Tuesday, during the first three quarters of 2010 the Shahdaniz field produced more than 5.3 billion cubic meters of gas and 1.4 million tons of condensate. For the full year BP Azerbaijan plans to produce 7.6bn cubic meters of gas and more than 2m tons of condensate.

Since the start of Shahdaniz production in late 2006 till the end of September 2010 about 46 million barrels (about 5.8 million tons) of Shahdaniz condensate was exported to world markets.

Production will increase as new wells are brought on stream over the next few years. Plateau production from Stage 1 is expected to be 8.6bn cubic meters of gas per year and about 45,000 bpd of condensate.

In January-September, the Shahdaniz field continued to produce from four wells to off-take points in Azerbaijan, Georgia and the Turkish border.

Shahdaniz participating interests are: BP (operator – 25.5%), Statoil (25.5%), Azerbaijan’s state energy firm SOCAR (10%), LUKOIL (10%), NICO (10%), Total (10%), and TPAO (9%).