The European Bank for Reconstruction and Development (EBRD) will provide a $100 million loan to LUKOIL Overseas Shah Deniz Ltd to extend additional financing for its share in the second stage of the development of Shah Deniz, an offshore gas exploration and production project in Azerbaijan and one of the largest gas fields in the world, the bank said in a message.
The loan was approved by the Board of Directors of the EBRD and will be directed to a project which includes two additional bridge-linked offshore gas platforms, 26 subsea wells, 500 kilometers of subsea pipelines, and the expansion of the gas plant at Sangachal Terminal.
The loan is fully guaranteed by PJSC LUKOIL.
LUKOIL has a 10 percent stake in the Shah Deniz field. The total volume of financing for LUKOIL’s share in Shah Deniz 2 project is $3 billion.
The contract for development of the Shah Deniz offshore field was signed on June 4, 1996. The field’s reserve is estimated at 1.2 trillion cubic meters of gas.
The shareholders are: BP, operator (28.8 percent), AzSD (10 percent), SGC Upstream (6.7 percent), Petronas (15.5 percent), Lukoil (10 percent), NICO (10 percent) and TPOC (19 percent).
As part of the implementation of the Shah Deniz 2 project, the annual gas production volume will increase from 9 billion cubic meters to additional 16 billion cubic meters.
The cost of the second stage of the field’s development is estimated at $25 billion. It is planned to get the first volumes of gas within the project in 2018 and it will be the main source for the Southern Gas Corridor project, which envisages transportation of gas to Turkey and European markets.
Azerbaijan became a member of EBRD in 1992.