ADB, EBRD to Extend $1 bn Finance for Shah Deniz Stage II

The Asian Development Bank (ADB) and the European Bank for Reconstruction and Development (EBRD), with the participation of the Black Sea Trade and Development Bank (BSTDB), would provide $1 billion finance for Shah Deniz stage II.

The development of the gas field will bring gas to south-eastern Europe. The gas will be transported through a chain of pipelines – including the existing South Caucasus Pipeline which will be extended under the project – as well as through the planned Trans-Anatolian and Trans-Adriatic pipelines.

This network of pipelines will transport the gas from Azerbaijan via Georgia and Turkey to Greece and Bulgaria, and on to Italy, from where it can reach wider Europe.

The financing will be extended to Lukoil Overseas Shah Deniz Ltd, a subsidiary of Lukoil, which has a 10 per cent interest in the Shah Deniz II gas field, EBRD said in a statement Friday.

The EBRD and ADB will each lend $250 million to the project on their own accounts (A-loans) and BSTDB will provide a $60 million parallel A-loan alongside the EBRD and ADB. The remainder of the financing will be provided by a group of commercial lenders – Bank of China, London branch; ING Bank N.V; Société Générale; and Unicredit Bank Austria AG, under the EBRD/ADB B-loan umbrella. One more commercial bank will join the syndicate at a later stage to complete the financing.

The total cost of the Shah Deniz II development by the operating consortium of companies (BP, TPAO, Petronas, SOCAR, Lukoil, NICO and SGC) is expected to top $47 billion, EBRD said.

BP will build and operate the project facilities. Production from the project is expected to begin in 2018 and will help provide jobs for over 16,000 people through to 2022.