BP, Partners sign Shah-Daniz gas deal

BP and its partners in the Shah Daniz gas field are delighted that officials representing Azerbaijan and Turkey signed an Inter-government Agreement and a Sale and Purchase Agreement in Ankara on March 12, 2001 to enable Turkey to buy gas from Azerbaijan. The execution of the documents was witnessed by presidents Sezer and Aliyev.

“These agreements for the sale of gas represent a great achievement by the working groups of the two countries. They provide the commercial and legal framework for this new gas province to be explored and developed by companies operating in Azerbaijan. Shah Daniz is one of the most competitive and reliable sources of gas for Turkey’s growing energy need’s,” said Rashid Djevanshir, president of BP exploration (Shah Daniz) Ltd.

Shah Daniz is located about 60 km offshore from Baku and was discovered less than two years ago. Anticipating an early sale of gas to Turkey, the Shah Daniz partners have already carried out extensive engineering studies on how to develop the field and has drilled a total of three wells to assess the size and productivity of the gas-bearing reservoir. Preliminary plans call for the construction of a new offshore production facility, a pipeline to a new onshore gas terminal and a new export pipeline in Azerbaijan and Georgia to the Turkey border. BOTAS will construct a new 250km pipeline from the Turkish border to Erzerum from where the gas will enter Turkey’s main distribution system.

The agreements state that up to 6.6 billion cubic meters per year of gas will be delivered to Turkey starting as early as 2004. The contract has a period of 15 years.

Officials noted the new gas project presents a great opportunity to consolidate the energy corridor from the Caspian Sea to the west. Both the Shah Daniz gas project and Baku-Tbilisi-Ceyhan oil pipeline project, whilst commercially and legally separate, are crucial elements of oil and gas infrastructure linking the Caspian Sea, via Georgia to Turkey and world markets.*