Shah Deniz II secures additional funding
The Asian Development Bank will provide $1 billion in private and public sector assistance to expand the Shah Deniz II project offshore Azerbaijan.
MANILA, the Philippines – The Asian Development Bank (ADB) will provide $1 billion in private and public sector assistance to expand Azerbaijan’s Shah Deniz II.
The assistance comprises a $500 million private sector loan to the Southern Gas Corridor Closed Joint Stock Co. (SGC) and a $500 million sovereign counter-guaranteed partial credit guarantee. The guarantee will back $526 million in commercial loans made by a consortium of international banks to SGC, which is 51% owned by the Azerbaijan government and 49% by the state oil company of the Azerbaijan Republic.
ADB said its assistance will provide additional revenues that the government can direct to social spending and to continued efforts to diversify the hydrocarbon-dependent Azerbaijan economy.
Shah Deniz is located offshore in the Caspian Sea, about 70 km (43 mi) from the capital city of Baku. The field’s annual gas production capacity is expected to increase from about 10 bcm to 26 bcm. The additional gas will be exported through a chain of pipelines — called the Southern Gas Corridor — via Georgia and Turkey on to Greece, Albania, and Italy from where it can reach wider Europe.
The total cost of theShah Deniz II expansion project, being developed by a consortium of companies, is expected to top $26 billion. BP will build and operate the project facilities. Production from the project is expected to begin in 2018.
In 2015, ADB approved a $475 million loan facility for Lukoil Overseas Shah Deniz to partly fund its share of the Shah Deniz gas field expansion.