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    ADB Considers $1.5bn Loan for Azerbaijan

Summary

Azerbaijan applied for more investment support from Asian bank to finance $45 billion Southern gas corridor project

by: Kama

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Natural Gas News, Corporate, Financials, Greater Caspian News, Caspian Focus, News By Country, Azerbaijan

ADB Considers $1.5bn Loan for Azerbaijan

The Asian Development Bank (ADB) is considering two loans to Azerbaijan entities totalling almost $2bn. The bank's plan is to improve Azerbaijan's economy through more gas exports and domestic employment.

The bigger loan is to fund the southern gas corridor project (SGC) that includes development of giant Shah Deniz 2 field and building a chain of export pipelines for gas supply to Europe.   

The multi-tranche financing facility (MFF) amounting to $1.505bn is set for approval on August 22. The MFF concept was approved late April.

The proposed loan will be provided on an annual base with separate tranches to the Southern Gas Corridor Company (SGCC) as the government agent for developing Shah Deniz 2 and export pipelines.  

The investment plan will provide a partial credit guarantee (PCG)  to support commercial bank financing for the government's 16.67% share of the development costs of the project, ADB said.

If third party financing is not available on reasonable terms and conditions that make the proposed investment financially and economically viable, the bank will consider the provision of a loan to the government.

Separately, ADB is considering a $450mn loan to expand Shah Deniz gas and condensate development and this may be granted before the larger one.

The second stage of the field development includes 26 subsea wells, two offshore platforms, gas and condensate subsea pipelines and the expansion of the Sangachal terminal near Baku and the export pipeline to Georgia and beyond.

Led by BP, an international consortium will expand output from Shah Deniz 2 by 16bn m³/yr, 10bn m³/yr of which will be pumped to Europe through the chain of export pipelines collectively known as the southern gas corridor with the other 6bn m³/yr going to Turkey.

“The plan is to accelerate this process with this loan. It is more likely, that ADB will approve this $450mn  loan  before the multi-tranche program as it requires less documentation and due diligence,” ADB sources told NGE

 

Azerbaijan desk

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