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Production capacity in Shah Deniz planned to be expanded this year

13 February 2014 10:31 (UTC +04:00)

In 2014, it is planned to spend around $200 million in operating expenditure and $4,000 million in capital expenditure. The great majority of this capital expenditure is on the Shah Deniz Stage 2 project, which includes both offshore developments and expansion of Sangachal terminal.

Last year the field produced about 9.8 billion cubic metres (about 345.5 billion cubic feet) of gas and 2.48 million tonnes (19.6 million barrels) of condensate, relevantly up 26.8% and 24% by contrast to 2012. Since the start of Shah Deniz production in late 2006 till the end of 2013, about 47.3 billion standard cubic metres (1,671 billion standard cubic feet) of Shah Deniz gas, and about 99.5 million barrels (12.6 million tonnes) of Shah Deniz condensate has been produced.

As a result of debottlenecking of existing facilities, Shah Deniz Stage 1 capacity has been increased to around 970 million standard cubic feet per day and approximately 55,000 barrels per day of condensate. The Shah Deniz partners have recently agreed terms with SOCAR for further expansion of production capacity to around 1040 million standard cubic feet per day by the end of 2014.

The total cost of the Shah Deniz Stage 2 project, including the South Caucasus Pipeline (SCP) expansion, will be around $28bn. 16 billion cubic metres per year (bcma) of gas produced from the giant Shah Deniz field will be carried some 3,500 kilometres to provide energy for millions of consumers in Georgia, Turkey, Greece, Bulgaria and Italy. First gas is targeted for late 2018, with sales to Georgia and Turkey; first deliveries to Europe will follow approximately a year later.

On 17 December 2013 the Shah Deniz consortium approved the final investment decision for the Stage 2 development. This decision has triggered plans to expand the South Caucasus Pipeline through Azerbaijan and Georgia by 16 bcma, to construct the Trans Anatolian Gas Pipeline (TANAP) across Turkey and to construct the Trans Adriatic Pipeline (TAP) across Greece, Albania and into Italy. Together these projects, as well as gas transmission infrastructure to Bulgaria, will create a new Southern Gas Corridor to Europe.

The Stage 2 project will provide for delivery of some 10 bcma of Shah Deniz gas for 25 years to customers in Italy, Greece and Bulgaria. In addition, some 6 bcma of Shah Deniz Stage 2 gas will be delivered to consumers in Turkey. All gas sales and transportation contracts will be managed by the Azerbaijan Gas Supply Company.