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Russian "Lukoil" company allocates $1 billion to Shah Deniz field development

07 August 2015 12:35 (UTC +04:00)

Some $560 million of that amount will be provided for 12 years jointly by the European Bank for Reconstruction and Development, the Asian Development Bank and the Black Sea Trade and Development Bank. The remaining amount, $440 million, will be provided for a period of 10 years by a commercial banking syndicate comprising of the ING Bank N.V., the Bank of China, UniCredit AG and Societe Generale via B Loan programs of the EBRD and ADB.

The loan was allocated for ensuring the company’s share of participation in the implementation of the second stage of development of the Shah Deniz gas and condensate field in the Azerbaijani sector of the Caspian Sea.

After the signing ceremony Ogtay Movsumov, Head of the Project and Structured Finance Department at Lukoil, said that the signing of such a big agreement testifies that the banks support not only Lukoil, but the Shah Deniz project.

"Shah Deniz project is one of the largest gas projects not only in the region but also worldwide,” he said. “The allocation of such a large loan testifies that this project is supported by many people."

Movsumov said that the loan has been delivered to the company for 12 years and with fairly good conditions.

Movsumov thanked SOCAR for assistance in the project preparation, as well as the technical operator of Shah Deniz - BP for assistance in arranging financing.

Allocating a loan testifies that the world's banks support an investment climate in Azerbaijan, Movsumov said.

The second stage of Shah Deniz field development started in December 2013. The total amount of investments provided by the operating consortium (BP-28.83 percent, TPAO-19 percent, Petronas-15.5 percent; SOCAR-10 percent, Lukoil-10 percent, NICO-10 percent and SGC-6.67 percent) will be approximately $28 billion, excluding the construction of the export pipeline systems.

BP will build and operate the project facilities. Production from the project is expected to begin in 2018 and will help provide jobs for over 16,000 people through to 2022. The annual total Shah Deniz Stage 1 and Stage 2 production will peak at 25 billion cubic meters of natural gas.

The contract for development of the Shah Deniz offshore field was signed June 4, 1996. The field’s reserve is estimated at 1.2 trillion cubic meters of gas.

The shareholders are: BP, operator (28.8 percent), AzSD (10 percent), SGC Upstream (6.7 percent), Malaysia’s Petronas (15.5 percent), Lukoil (10 percent), NICO (10 percent) and TPAO (19 percent).