Azernews.Az

The second stage of the project on developing Azerbaijan's giant Shah Deniz offshore gas field and supply of Azerbaijani gas to Europe will require investments to the tune of up to $45 billion, an official of the state energy firm SOCAR told Trend news agency.

"Gas production and construction of the necessary pipeline infrastructure will require around $40-45 billion," the official said.

The SOCAR representative said some $25 billion will be needed for the implementation of the second stage of development at Shah Deniz, construction of platforms, drilling work and extension of the Sangachal terminal near the capital Baku. The second stage is due to begin from 2017 or 2018.

Although the second stage of Shah Deniz development and supply of Azerbaijani gas to European markets are costly, this project will provide a significant flow of foreign investment.

The project realization can turn into a second investment boom in the Azerbaijani oil sector after the Azeri-Chirag-Gunashli oil and gas field development project. According to estimates, as of August 1, $28.67 billion had been contributed to this development project in the Azerbaijani sector of the Caspian Sea.

The contract to develop the Shah Deniz field was signed in June 1996. Shah Deniz participating interests are: BP (operator - 25.5%), Statoil (25.5%), SOCAR (10%), LUKOIL (10%), NICO (10%), Total (10%), and TPAO (9%).

Gas reserves of the Shah Deniz field are estimated at 1.2 trillion cubic meters. It is predicted that during Phase 2 gas production could be brought to 24 billion cubic meters a year. Gas to be produced during this phase is considered as the main source for the Southern Gas Corridor projects, and in particular Nabucco West and Trans Adriatic Pipeline (TAP). Azerbaijan plans to export 10 billion cubic metres of gas per year to Europe as part of the second phase of the Shah Deniz development.