SOCAR increases participation in Shah Deniz, SCP

By Azernews

By Ayya Lmahamad

Azerbaijan's State Oil Company (SOCAR) has increased its participation in the Shah Deniz and South Caucasus Pipeline (SCP) projects.

Following Petronas's decision to sell its stakes in the production sharing agreement (PSA) for the exploration and development of the Shah Deniz field, SOCAR acquires 4.35 percent of stakes from Petronas in accordance with the terms of the agreement between Shah Deniz project partners.

Thus, SOCAR'S direct participation in the project is growing to 14.35 percent.

At the same time, LUKOIL and BP, both partners at the Shah Deniz consortium, acquired the other part of Petronas's 15.5 percent stakes in the project.

The respective agreement is expected to enter into force in January 2022. 

Apart from this, Azerbaijan's Economy Ministry and SOCAR hold 51 and 49 percent shares in Southern Gas Corridor CJSC, which in turn has a 6.67 percent stake in the Shah Deniz project.

Along with the shift in stakes of companies in the Shah Deniz project, equivalent changes took place in the distribution of stakes between companies in the South Caucasus Pipeline, one of the segments of the Southern Gas Corridor.

The PSA for the exploration and development of the Shah Deniz prospect in the Azerbaijani sector of the Caspian Sea was signed on June 4, 1996, between SOCAR and a consortium of international companies. The field is located in the Azerbaijani sector of the Caspian Sea, 70 km southeast of Baku.

The final investment decision on the second phase of development of the Shah Deniz field and the Southern Gas Corridor was announced on December 17, 2013. In 2018, the first natural gas produced under the Shah Deniz 2 project was delivered to Turkey. Starting from December 31, 2020, natural gas from the Shah Deniz field is being supplied to European countries via the Southern Gas Corridor.