Offshore natural gas field project in Azerbaijan, Shah Deniz stage II will receive a financing package of $1bn from the Asian Development Bank (ADB) and the European Bank for Reconstruction and Development (EBRD), and the Black Sea Trade and Development Bank (BSTDB).
The total cost of the Shah Deniz II development will top $47bn. It is planned to be developed in a consortium of companies which includes BP, TPAO, Petronas, SOCAR, Lukoil, NICO and SGC.
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The gas field will feed Southern Gas Corridor from Caspian to Europe and its development would bring gas to south-eastern Europe.
Lukoil Overseas Shah Deniz, a subsidiary of Lukoil, which has a 10% interest in the field will get the financing.
A chain of pipelines including the existing South Caucasus Pipeline and the planned Trans-Anatolian and Trans-Adriatic pipelines will be used to transport gas from Azerbaijan through Georgia and Turkey to Greece and Bulgaria, and later on to Italy to reach Europe.
ADB private sector operations department deputy director general Michael Barrow said: "This will be the largest gas field development project undertaken in Azerbaijan, generating more economic opportunities and helping to boost closer regional ties with Georgia and Europe.
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By GlobalData"ADB’s involvement has helped catalyse long-term bank financing support from commercial banks."
EBRD Energy and Natural Resources managing director Riccardo Puliti said: "This project is one of the EU’s highest priorities for the energy sector.
"It helps cut carbon emissions by providing a bridge fuel for renewables and replacing coal. The project will also be a very big step towards the market-based hub pricing for gas which will bring Europe closer to a common gas market."
As part of the financing, the EBRD and ADB will each lend $250m to the project and BSTDB will provide a $60m.
A group of commercial lenders including Bank of China, London branch; ING Bank; Société Générale; and Unicredit Bank Austria will provide the remainder of the financing.
The project, from which production is expected to begin in 2018, will help provide jobs for over 16,000 people through to 2022.
Image: Shah Deniz stage II offshore project in Azerbaijan. Photo: European Bank for Reconstruction and Development
