Azernews.Az

The consortium of Azerbaijani Shah Deniz gas condensate field development has approved the decision to commence Front End Engineering and Design (FEED) on the estimated $25 billion Stage 2 of the project, BP said.

The announcement was made in Baku on Tuesday during a meeting of President Ilham Aliyev and Bob Dudley, Group Chief Executive of BP, the operator of Shah Deniz project, who is on a working visit to Azerbaijan.

Achieving this important milestone allows the consortium to maintain its target for first gas exports around the end of 2017.

Gas to be produced during the second stage of Shah Deniz field development is considered as the main source for all Southern Gas Corridor projects, which are designed to transport Azerbaijani gas to European markets. Azerbaijan intends to transport 10 billion cubic meters per year to Europe within the Shah Deniz Stage 2 project.

The entry into FEED represents the start of a key phase in the project during which engineering studies will be refined, further wells will be drilled, commercial agreements finalized and key construction contracts commenced, BP said.

During the FEED phase of the project, the Shah Deniz consortium will finalize its selection of export routes across Turkey and into Europe.

According to the BP President of the Azerbaijan, Georgia and Turkey Region, Rashid Javanshir, over the past two years a substantial progress on all the individual components of this mega-project has been made.

``Engineering studies, commercial agreements and the support of the State of Azerbaijan and other governments give the Shah Deniz consortium the confidence to embark upon this FEED phase,`` Javanshir said.

He added that with over 30 trillion cubic feet of gas resources, Shah Deniz is ``truly a giant field``.

``And with more than 26 wells, two new platforms, a terminal expansion and up to 4,000 km of new pipelines to Europe, this chain of major projects represent one of the largest oil and gas developments in the world,`` Javanshir said.

Shah Deniz Stage 2 is expected to add a further 16 billion cubic meters per year (bcma) of gas production to the approximately 9 bcma from Shah Deniz Stage 1.

This Stage 2 development of the Shah Deniz field, which lies some 70 kilometers offshore in the Caspian, is expected to include two new bridge-linked production platforms; 26 subsea wells to be drilled with 2 semi-submersible rigs; 500 km of subsea pipelines built at up to 550m of water depth; a 16 bcma upgrade for the South Caucasus Pipeline (SCP); and expansion of the Sangachal Terminal. Further pipelines will be built and expanded to transport Shah Deniz gas through Turkey and Europe.

Shahdaniz reserves are estimated at 1.2 trillion cubic meters of gas.

The contract to develop the field was signed in 1996. The shareholders are BP and Statoil, with 25.5 percent each, NICO with 10 percent, Total (10 percent), LukAgip (10 percent), TPAO (9 percent), and Azerbaijan`s state energy firm Socar (10 percent).

Azerbaijan and Turkey plan to build a pipeline from the eastern border of Turkey to the country`s western border. Socar holds 80 percent in the TANAP project, while the Turkish state-owned energy company Botas has a 20 percent stake.

Earlier this year the Shah Deniz consortium made Trans Adriatic Pipeline (TAP) a priority route for export of Azerbaijani gas to Italy.

The consortium is currently selecting a pipeline route to the South-Eastern and Central Europe between Nabucco West and South-East Europe Pipeline (SEEP), proposed by BP.

The final decision on a pipeline route to export Azerbaijani gas to European markets is expected in 2013.