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    Shah Deniz 2 Flows to Turkey, New Loan Agreed


BP has announced the start-up of Shah Deniz 2, including its first commercial gas delivery to Turkey, while an Azeri partner has secured a new loan.

by: Ilham Shaban, Dalga Khatinoglu

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Natural Gas & LNG News, Europe, Corporate, Exploration & Production, Import/Export, Investments, Political, Supply/Demand, Caspian Focus, Infrastructure, Pipelines, Trans-Adriatic Pipeline (TAP) , Trans-Anatolian Gas Pipeline (TANAP) , News By Country, Azerbaijan, Turkey

Shah Deniz 2 Flows to Turkey, New Loan Agreed

BP and its partners announced the start-up of Shah Deniz 2 on June 30 2018, including its first commercial gas delivery to Turkey.

The UK oil major made the announcement July 2. It had previously told NGW that gas deliveries would start July 1 and reach Eskishehir in northwest Turkey. It means that the $28bn BP-operated upstream project offshore Azerbaijan started on time and, BP added, on budget.

BP CEO Bob Dudley said: “Together with the Southern Gas Corridor pipeline system, Shah Deniz 2 will deliver significant new energy supplies to Europe, further diversifying its sources of energy and providing new supplies of natural gas which will be essential in the energy transition.”  (Banner photo above shows the Shah Deniz 2 'Bravo' platform - credit: BP)

The Shah Deniz 2 (SD2) offshore project includes 26 subsea wells, 500km of subsea pipes, and two new bridge-linked platforms. BP upstream chief Bernard Looney said: “Bringing this huge project online within the schedule and budget we set out at sanction 4½ years ago is further evidence of our focus on efficient and disciplined project execution." He added that SD2 was BP's "largest start-up for the year."

The Azerbaijan Gas Supply Company (AGSC) will sell these volumes to Turkey’s Botas. A government source also told NGW that Botas has ordered 2bn m3 gas from consortium within a year by July 2019.

The first stage of the 2000-km Southern Gas Corridor (SGC), from Azerbaijan’s Caspian shores to Eskiseher in northwest Turkey, started up May 29 with volumes supplied from Shah Deniz 1 (SD1) in Baku. The opening ceremony of the Trans Anatolian pipeline (Tanap) was also held at the pipeline’s main Turkish offtake point at Eskisehir June 12.

Loan agreed

Azeri state-owned Southern Gas Corridor company (SGCC) - which has equity stakes in the all three key sections of the entire 3500-km planned pipe route from Azerbaijan to Italy - said June 30 that it signed a $750mn ($500mn and €215mn) syndicated loan agreement under the World Bank’s Multilateral Investment Guarantee Agency (MIGA) guarantee and Republic of Azerbaijan (sovereign guarantee).

The new loan, signed June 29, will finance the Tanap project.  SGCC CEO Afgan Isayev told NGW that, as at July 2, the financing source of SGCC was:

-          issuance of bonds by SGCC and State Oil Fund of the Republic of Azerbaijan for total amount of $2.5bn

-          equity injections from the Ministry of Economy and SOCAR for a total amount of $2.4bn

-          placement of an inaugural Eurobond in the amount of $1bn in March 2016 and a tap of the Eurobond for $1bn in March 2017

-          collecting $3.3bn credits from international financial entities, of which $2.3bn allocated to Tanap.

Works in the BP-operated Shah Deniz 2 (SD2) field and South Caucasus Pipeline Expansion project (SCPX) are fully completed, said Isayev. He added that Tanap is 94.8%-complete and the Trans Adriatic Pipeline (TAP) is 74.6%-complete. SGC from Azerbaijan to Italy will be 3,500 km long and be fully operative in 2020, when the final westernmost TAP leg starts up.