Alasdair Cook: A View on Shah Deniz

Shah Deniz Stage 2, or Full Field Development (FFD), is a giant project that will bring gas from Azerbaijan to Europe and Turkey. This will increase gas supply and energy security to European markets through the opening of the new southern gas corridor.

As British Petroleum’s VP for Shah Deniz FFD, Alasdair Cook is responsible for the integrated leadership of this project, bringing gas from the Caspian Sea to Europe for the first time. The project includes construction of offshore facilities in Azerbaijan, expansion of a terminal and pipeline system from Azerbaijan to Turkey and marketing of the gas in Europe.

Mr. Cook has been nominated for the 2012 European Gas Conference Awards as Executive of the Year and provided Natural Gas Europe an exclusive interview.

How would you describe up to date developments regarding Shah Deniz 2 project?

The Shah Deniz project really expanded over the last year, with early engineering completed for the platforms, subsea installations, terminal and pipelines. We’ve also seen progress with drilling, with the completion of one development well and progression of another. The key success of 2011 has undoubtedly been the agreement between Shah Deniz and Turkey in October to open the Southern Gas Corridor. In addition, we have completed the 'request for proposals' for pipeline offers to take our gas to South or Central Europe, and that includes the offers from Nabucco, ITGI and TAP. All this means that we can move into our $3bn FEED program at the start of 2012.

What major challenge does the project face?

The real challenge is foremost the cooperation and coordination of all stakeholders participating in Shah Deniz 2. Production is scheduled to start up in 2017 and throughout the upcoming development, Azerbaijan, Georgia, Turkey, the EU and USA – and a number of other countries  - will need to support the project. The main challenge ahead of us is to be able to align between governments and participating companies, so as to ensure to the market that the gas will flow uninterrupted. We believe that Shah Deniz 2 is the most complex gas project developed to date: it involves so many different countries and companies. Certainly the international cooperation of all parties involved is essential.

In your opinion, what does 2012 hold for the Shah Deniz 2 project particularly with regards to the Southern Gas Corridor?

In 2012, we will turn from agreements to reality. We will turn from sheets of paper to sheets of steel. We will proceed with awarding up to 3 billion dollars’ worth of contracts later on this year.  We will also select a pipeline route for the Southern Corridor. I think the project is progressing well and its immense potential is becoming evident to all parties involved. Lastly cooperation between us and the countries involved, and especially Azerbaijan, Georgia and Turkey will increase even further.

How has the climate of cooperation been with international bodies such as the EU?

I would like to point out firstly, that our cooperation with Azerbaijan has been outstanding so far. SOCAR has done an outstanding job, especially in achieving agreements in Turkey such as the ones that took place between October and December 2011.. SOCAR leads the pipeline selection process also for the Southern Corridor. Furthermore, our collaboration with Turkey and in particular with the Energy Minister Taner Yıldız has been excellent. Turkey is seriously striving to become an energy hub and has ambitious plans regarding imports of Caspian gas.

The European Union as well, has been supportive, especially through the Energy Commissioner Günther Oettinger, who assisted in all fronts regarding the Southern Corridor route. Moreover, United States Ambassador Richard Morningstar has been present in every step, in an effort to secure cooperation between all stakeholders for the Shah Deniz project. All in all, we can say that our cooperation with national governments and international bodies involved with the project has been very positive.

How important will Shah Deniz 2 be with regards to European energy security?

It is very important on two accounts. Firstly, it is the first time that Caspian natural gas will find its way into Europe, thus allowing diversification of European energy imports, and improving energy security. Second, it is important to note that by opening up a route for Shah Deniz gas to the European market, we can also open up the region. This includes putting in place the political, legal and engineering infrastructure to allow gas to flow.

How do you envisage the future of this project a generation from now?

Shah Deniz 2 is the biggest gas discovery BP has ever made and I am certain that production from such a giant reservoir will continue for decades from now. Moreover, the Shah Deniz Deep discovery, which was made a few years ago, will provide us with further quantities of natural gas. In that respect I view the project as a long-term one with an important role for the European market and a positive impact in terms of energy security. 

Lastly, regarding the selection for the transfer of gas to South or Central Europe - are you confident it will be decided within the next year?

We have already agreed that 6 bcm of gas will be delivered into Turkey, which will certainly become our most important market. As regards Europe, the regions of Central or South Europe could be the main export markets. A pipeline selection will be made in the coming months as to which pipeline routes will be awarded the go ahead for the Southern Corridor.

I would like to emphasize the importance of the partnerships to Shah Deniz. This includes the partnership with the Azerbaijan Government, the partnership inside Shah Deniz with SOCAR, Statoil, Total and others, and the partnership with governments along the pipeline route. 

Learn more about BP Caspian its website LINK    The European Gas Conference and Awards are being held 24-27 January 2012, Vienna  LINK