TODAY.AZ / Business

EBRD extends senior loan for Shah Deniz project

27 February 2014 [17:25] - TODAY.AZ
By AzerNews

The European Bank for Reconstruction and Development (EBRD) is extending a senior loan worth $200 million for Russia's Lukoil Overseas Shah Deniz Ltd.

The aim is to finance the development of giant Shah Deniz gas condensate field located in Azerbaijan's sector of the Caspian Sea, EBRD said on February 27.

"Stage 1 of the Shah Deniz field is crucial for the energy security of Azerbaijan, Georgia and Turkey. Our new financing will help prepare the ground for further reservoir expansion to feed the gas through the Southern Corridor - a proposed energy route from the Caspian which could potentially deliver gas all the way to the European Union. This project is also an example of the good cooperation with Lukoil in our common efforts to develop operational best practices for hydrocarbon production," EBRD Managing Director for Energy and National Resources Riccardo Puliti said.

The EBRD has played a crucial role in the initial development of Shah Deniz Stage 1, providing Lukoil with loans worth $180 million, and Azerbaijan's state energy company SOCAR with $170 million. The EBRD also ensured the application of high international standards - technical, environmental and health and safety.

"Shah Deniz is one of the company's key projects in this region, and Lukoil is paying substantial attention to ensuring that high standards are implemented in the field. We are satisfied with our long-term cooperation with the EBRD and appreciate their support for our efforts in these matters," Vice President of Lukoil, President of Lukoil Overseas, Andrey Kuzyayev said.

The current loan will pay for part of a technological upgrade of existing operations, which could see output from the field increase by up to 2 billion cubic meters (bcm) per year. This increase will see peak production from the gas field reach 8.9 bcm per year. For comparison, Azerbaijan itself consumes 13 bcm of gas per annum.

The total cost of expenditures on the first stage of the Shah Deniz field development project is estimated at $2.128 billion. Lukoil's share in the projects will amount to $212.8 million.

Lukoil Overseas Shah Deniz Ltd is a 100-percent daughter company of Lukoil Overseas, a holding company that manages Lukoil's participation in exploration and production projects outside Russia.

Lukoil holds a ten-percent interest in the Shah Deniz development project.

The Shah Deniz field was discovered in 1999. It is one of the world's largest gas-condensate fields. The reserves are estimated at 1.2 trillion cubic meters of gas.

The Shah Deniz Stage 1 was launched in 2006. It has the capacity to produce about 9 billion cubic meters of gas per year and approximately 50,000 barrels a day of condensate.

Shah Deniz is operated by the London-based BP. The partners include SOCAR, Statoil, Total, Lukoil, NICO and TPAO. BP and Shah Deniz partners have invested $6 billion in Shah Deniz Stage 1 up to date.

The EBRD invests in the enterprise, financial and infrastructure sectors to promote sustainable growth in Azerbaijan.

Since the start of its operations in the country, the EBRD has invested around $ 2 billion in about 137 projects, with over 90 percent of these projects investing in the development of the private sector. Around 73 transactions with a total value of approximately $540 million have been signed with financial institutions in Azerbaijan.

Print version

Views: 965

Connect with us. Get latest news and updates.

Recommend news to friend

  • Your name:
  • Your e-mail:
  • Friend's name:
  • Friend's e-mail: