Shah Deniz

Location and Geology

The Shah Deniz field is situated approximately 100 km southeast of Baku, Azerbaijan, in the Caspian Sea. The field spans an area of about 860 square kilometers and is located in water depths ranging from 50 to 500 meters.

Discovery and Development

The Shah Deniz field was discovered by the SDX-01 exploration well in July 1999. It is the largest gas discovery ever made by BP, which operates the field with a 28.8% participating interest. The field is developed in two main stages:

Stage 1

• Commenced operations in December 2006.
• Includes a fixed platform (TPG 500) capable of processing up to one billion cubic feet (bcf) of gas and 60,000 barrels of condensate per day.
• Gas and condensate are transported to the onshore Sangachal terminal through two separate 90km-long subsea pipelines.
• Annual production capacity is approximately 10 billion cubic meters (bcm) of gas.

Stage 2

• Sanctioned in December 2013 with a final investment decision (FID) of £21 billion ($28 billion).
• Includes 26 subsea wells, two offshore platforms (a production and risers platform and a quarters and utilities platform), and 500 km of subsea pipelines and flowlines.
• Gas is transported onshore through an 85 km pipeline to the expanded Sangachal terminal.
• This stage increased the total production capacity to up to 26 bcm of gas per year and over 100,000 barrels of condensate per day.
• Commercial gas deliveries to Turkey began on June 30, 2018, and to European markets via the Southern Gas Corridor (SGC) on December 31, 2020.

Production and Reserves

• The Shah Deniz field is estimated to contain up to 1.2 trillion cubic meters (tcm) of gas and 240 million tonnes of condensates in recoverable reserves.
• The current production capacity is approximately 20 bcm of gas per year, with peak production expected around 2028. Production is anticipated to continue until the field reaches its economic limit in 2068.

Partners and Ownership

The development partners of the Shah Deniz field include:

• BP (operator) - 28.8%
• Turkish Petroleum Corporation (TPAO) - 19%
• Petronas - 15.5%
• SGC Upstream (SOCAR subsidiary) - 6.7%
• AzSD (SOCAR subsidiary) - 10%
• Lukoil (Russia) - 10%
• Naftiran Intertrade Company (NICO, Iran) - 10%.

Infrastructure and Transportation

• The gas produced is transported through the South Caucasus Pipeline (SCP) to Turkey via Georgia, and further to Europe via the Trans-Anatolian Natural Gas Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP), forming the 3,500 km-long Southern Gas Corridor (SGC).

Contractors and Suppliers

Key contractors involved in the project include:

• Technip: Designed the TPG 500 platform.
• McDermott Caspian Contractors: Laid the subsea pipelines in Stage 1.
• Tefken and Azfen: Awarded contracts for expanding facilities at the Sangachal terminal and fabricating and installing platform topsides for Stage 2.
• KBR: Involved in design/FEED engineering for the project.

Environmental and Social Impact

The project has undergone extensive Environmental and Socio-Economic Impact Assessments (ESIA). The assessments were approved by the Azerbaijan government and are consistent with the European Bank for Reconstruction and Development (EBRD) environmental policies. The project includes numerous environmental mitigation measures to minimize impacts during construction and operation.

Future Development

There are plans for a potential Shah Deniz 3 project, which is currently in the feed stage and expected to start around 2030.

The Shah Deniz gas field is a critical component of Azerbaijan's energy sector, significantly contributing to the country's gas production and playing a key role in diversifying Europe's energy supplies through the Southern Gas Corridor.