LUKOIL to increase ownership in Caspian Sea Shah Deniz project
PJSC LUKOIL agreed to acquire a 15.5% interest in the Shah Deniz natural gas project in the Azerbaijan sector of the Caspian Sea from Petronas in a deal valued at $2.25 billion.
Following completion of the sale, LUKOIL's interest in the bp-operated (28.8%) project will increase to 25.5% from 10%. Other partners are TPAO (19%), SOCAR (10%), NICO (10%), and SGC (6.7%).
Shah Deniz gas-condensate field, bp’s largest gas discovery, was found in 1999 and is estimated to hold 1 trillion cu m of gas. It covers 860 sq km and lies in water depths up to 500 m. The first phase of field development, Shah Deniz 1, began production in 2006, delivering more than 10 billion cu m/year (bcmy) (OGJ Online, Dec. 8, 2006). The second phase, which started in 2018, increase the designed production level by 16 bcmy (OGJ Online, July 2, 2018).
In first-half 2021, the field produced 10 billion standard cu m (bcm) of gas and around 1.9 million tonnes (15.1 million bbl) of condensate in total from Shah Deniz Alpha and Shah Deniz Bravo platforms.
Recovered gas is delivered to buyers via the South-Caucasus pipeline Baku-Tbilisi-Erzurum, while recovered liquid hydrocarbons are delivered via the Baku-Tbilisi-Ceyhan oil pipeline. Commissioning of the Trans-Adriatic Pipeline (TAP) gas pipeline at end 2020 allowed the start of commercial gas deliveries to Europe via the Southern Gas Corridor pipeline system (OGJ Online, Nov. 16, 2020).
During the first 6 months of the year, Shah Deniz field continued to provide deliveries of gas to markets in Azerbaijan (to SOCAR), Georgia (to GOGC and SOCAR), Turkey (to BOTAS), and to BTC Co. in multiple locations. Gas deliveries to buyers in Europe that started on Dec. 31, 2020, also continued during first-half 2021.
The existing Shah Deniz facilities’ production capacity is currently over 58 million st cu m/d of gas.
Completion of the deal is subject to conditions, including approval by SOCAR, the State Oil Co. of the Azerbaijan Republic.
