Shah Deniz Consortium Inks Major Gas Deals

The BP Plc led consortium developing Azerbaijan’s Shah Deniz natural gas field has entered in to major supply agreements valued at more than $100 billion.

Alasdair Cook, BP’s Vice President for Shah Deniz Development, said that nine buyers had agreed to 25 year contracts to purchase “significant quantities” of gas, representing more than 10 billion cubic meters of gas annually from the field’s second phase starting in 2019.

“The gas contracts signed today are sensitive to market demands within Europe,” Cook said. “The way we sell the gas recognizes the needs of the countries and the companies that we are selling gas to.”

The contacts provide a significant step forwards as the consortium moves towards a final investment decision for the Shah Deniz II project planned by year end.

“The strong demand for Shah Deniz gas gives us confidence in the long-term development of Azerbaijan's gas resources," said Gordon Birrell, regional president for BP in Azerbaijan, Georgia and Turkey.

Around two billion cubic meters of gas will supply Bulgaria and Greece, with upwards of eight billion cubic meters intended to supply Italy and adjacent market hubs.

Enel SpA, EON SE, GDF Suez SA, Axpo Trading AG, Bulgargaz EAD, Depa, Gas Natural Fenosa, Hera Trading Srl and Shell Energy Europe were reported as purchasers.