A step forward for Shah Deniz
The signing of a Memorandum of Understanding between Turkey and Azerbaijan on 7 June is a major step forward for the Shah Deniz project. This is an important development for Statoil’s activities in Azerbaijan.
The agreement involves a change in prices for Azerbaijani gas for Turkey for Shah Deniz Phase 1, gas prices for the second phase of the project, as well as the transit of Azerbaijani gas through Turkey.
The agreement paves the way for the development of Phase 2 of the Shah Deniz field, expected to come on stream late 2016.
Vice President for Gas Marketing-Shah Deniz, Olav Skalmeraas, underlined the agreement’s significance:
“This is an important step for the consortium of companies involved in Shah Deniz. Now we can proceed to the commercialisation of phase 2.”
Expanding production and transit
Statoil has a 25.5% ownership share in the Shah Deniz gas field, which is located in the Caspian Sea southeast of Baku and is Azerbaijan’s largest gas resource.
Gas from the site is currently transported through the 690 kilometre South Caucasus Pipeline (SCP), which extends to the border between Georgia and Turkey.
While peak production from the Shah Deniz Phase 1 is projected at 8,6-9 billion cubic meters, gas production will be increased by another 16 billion cubic meters per year within Phase 2.
Another important consequence of the agreement is that it opens the door to creating a fourth gas corridor to the European market.
Gas to Europe
To connect existing and planned natural gas transport grids in south-east Europe with gas systems in western Europe, this agreement opens the door for the Shah Deniz consortium to start negotiations with customers and transportation solutions such as Nabucco, the Italy-Turkey-Greece-Interconnector (ITGI) and the Trans Adriatic Pipeline (TAP).