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Final Deal Signed To Send Azerbaijani Gas To Europe

December 17, 2013
by RFE/RL's Azerbaijani Service

BAKU -- The consortium developing Azerbaijan's Shah Deniz-2 natural-gas project has signed a final investment agreement, paving the way for the first deliveries to Europe.

Azerbaijani President Ilham Aliyev said deals signed on December 17 in Baku include an investment decision on the Shah Deniz-2 offshore oil and gas fields and the Trans-Anatolian (TANAP) and Trans-Adriatic (TAP) gas pipelines -- projects worth at least $35 billion.

The Shah Deniz-2 deal will provide Europe with a new gas supply via a route that avoids Russian territory.

The TANAP and TAP pipelines replace the EU-backed Nabucco pipeline project in bringing Azerbaijani gas to Europe. The Shah Deniz consortium approved the use of the TAP pipeline, as opposed to the truncated Nabucco West project, earlier this year.

Aliyev said the agreements 'will change the energy map of Europe.' He added, 'Azerbaijani gas can now reach the market that needs it the most.'

British company BP is one of the main partners in the project.

British Foreign Secretary William Hague attended the signing ceremony and said the deal was 'welcome news for Azerbaijan, for the U.K., and for Europe.'

European Union Energy Commissioner Gunther Oettinger was also at the ceremony and said the deal is a major contribution to the EU's Southern Gas Corridor plan. Oettinger said the corridor could 'in the long term' supply up to 20 percent of the EU's gas needs.

In Brussels, EU Commission President Jose Manuel Barroso called the Shah Deniz-2 agreement 'a strategic door opener for stronger European energy security.'

Shah Deniz-2 will eventually ship some 20 billion cubic meters (bcm) of gas per year. Turkey and Georgia will receive about 6 bcm of that gas.

The Shah Deniz field is estimated to hold some 1.2 trillion cubic meters in gas reserves.

Norway's Statoil Drops Out

In a surprise announcement at the signing ceremony on December 17, Norwegian consortium partner Statoil said it was selling 10 percent of its 25.5 percent stake in the Shah Deniz-2 project.

The State Oil Company of the Azerbaijan Republic (SOCAR) purchased 6.7 percent of the Statoil stake and BP purchased the remaining 2.3 percent.

BP now owns a 28.8 percent-share in the project and SOCAR a 16.7 percent stake. Statoil's stake drops to 15.5 percent. Other partners are France's Total, the National Iranian Oil Company, and Russia's LUKoil -- each with 10 percent -- and Turkey's national oil and gas company TPAO with 9 percent.

On December 16, Total and Statoil announced they were dropping out of the TANAP project, which runs the length of Turkey, and that their shares would be distributed equally among the remaining partners in the project -- SOCAR, BP, TPAO, and another Turkish company, Botas.

Ahead of the signing ceremony, Amnesty International released a statement calling on Hague to raise human rights concerns during his visit to Azerbaijan. Amnesty's statement said, 'Azerbaijan has an appalling human rights record' and that 'William Hague should be calling for the release of prisoners of conscience, targeted for criticizing the image-obsessed government.'

Amnesty pointed out that Britain is responsible for almost half of all foreign investment in Azerbaijan.

With reporting by Trend.az, Reuters, and AFP

Source: http://www.rferl.org/content/ article/25203807.html

Copyright (c) 2013. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.

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