EBRD, ADB Confirm $1 Billion Financing Package for Shah Deniz Stage II
LUKoil has signed a deal for a syndicated loan worth $1 billion with 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). A financing package is being arranged for the landmark offshore natural gas field project in Azerbaijan, Shah Deniz Stage.
“This will be the largest gas field development project undertaken in Azerbaijan, generating more economic opportunities and helping to boost closer regional ties with Georgia and Europe,” Michael Barrow, Deputy Director General of ADB’s Private Sector Operations Department, commented in a note released on Friday.
EBRD and ADB allocated $250 million loan each one, while BSTDB obliged to issue $60 million.
According to detailed information obtained by Natural Gas Europe on August 7th from sources at the ceremony of the signing contract at the Marriott Absheron Hotel in Baku, the remaining $440 million loan also will be issued by a syndicate of banks for 10 years by French Société Générale Bank, Bank of China, Dutch ING Bank and Italian UniCredit with the mediation of the EBRD and the ADB through the ‘B Loan Program’.
During the ceremony, Vice President for Operations, LUKoil Overseas, Sergey Suchok said that the signed contract is the biggest loan agreement between this company and foreign banks to develop an upstream energy project so far.
"This is very important event for LUKoil, while SD2 is a very big project, aimed to producing 16 billion cubic meters per annum (bcm/a)".
He said that it's expected that the pick of production level will stand at 26 bcm/a in 2022 and this level would continue by 2027.
Last year, Azerbaijan produced 9.9 bcm/a of gas from Shah Deniz stage 1 (SD1).
Shah Deniz Stage 2 of started in December 2013. The total amount of investments provided by the operating consortium (BP, 28.83%; TPAO, 19%; Petronas, 15.5%; SOCAR, 10%; LUKOIL, 10%; NICO, 10%; and SGC, 6.67%) will be approximately USD 28 billion, excluding the construction of the export pipeline systems.
Lukoil reported that the annual total Shah Deniz Stage 1 and Stage 2 production will peak at 25 billion cubic meters of natural gas.
Shah Deniz Stage 2, or Full Field Development (FFD), is also a giant project that will add a further 16 bcm of gas production to SD1's gas production by late 2018 to be supplied to Turkey (6 bcm in 2018) and the EU (10 bcm in 2020).
The 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.