Shah Deniz Gas Field

=Overview=

Shah Deniz, a gas field around 70 kilometres (km) south-east of Baku in the Caspian Sea, was BP's largest ever gas discovery. The height of the reservoir is 700m, or 25 times taller than Baku's Maiden Tower. The reservoir is also 20km long and 7km wide, or roughly the size of Manhattan Island in New York.

European companies hope that the field can supply them with gas and cut their dependence on supplies from Russia.

Stage 1
Shah Deniz Stage 1 started operations in 2006, with a maximum rate of production expected to be 8.6 billion cubic metres of gas per annum (bcma) and approximately 50,000 barrels per day (bpd) of condensate. Stage 1 was developed over seven years and supplies gas to Azerbaijan, Georgia and Turkey.

Stage 2
Shah Deniz Stage 2, or Full Field Development (FFD) is a large-scale project designed to export gas to Europe and Turkey through the opening of the new Southern Gas Corridor. BP expects the project to add a further 16 billion cubic metres per year (bcma) to that produced by Shah Deniz Stage 1.

Plans for the estimated US$25 billion project include two new bridge-linked offshore platforms, 26 sub-sea wells, 500km of sub-sea pipelines built at up to 550m water depth, a 16 bcma upgrade for the South Caucasus Pipeline (SCP) and expansion of the Sangachal Terminal.

The Front End Engineering and Design (FEED) stage of the project was due to be launched in April 2012. The second phase is expected to start by the end of 2017. Once the export route has been selected, engineering studies will be refined, further wells will be drilled, commercial agreements will be finalized and key construction contracts will start, according to BP.

=Ownership=

The Shah Deniz consortium includes BP (25.5%), Norway's Statoil (25.5%), Iran's NIOC (10%), SOCAR (10%), France's Total (10%), Russia's Lukoil(10%) and Turkey's TPAO (9%).

According to a 2012 report, UK oil major BP was expected to make a decision on investment on the second development phase of Shah Deniz by 2013. The Shah Deniz II project requires total investment of US$20 billion and expects to achieve export levels of 10 billion cubic metres (bcm) of gas to Europe and 6bcm to Turkey by 2018.

=Export Routes=

London-based publication the Petroleum Economist reported that the consortium behind Shah Deniz had found the negotiations with the pipelines bidding for the gas produced, including Nabucco, the Interconnector Turkey-Greece-Italy (ITGI) and the Trans-Adriatic Pipeline (TAP), unexpectedly complex.

The selection of the export route from Shah Deniz II is to be made by the operating consortium and a final decision on the route is due to be made in 2013. Various pipeline options are vying to carry gas from the field.

"Main article: The 'Southern Corridor' and pipeline politics in the South Caucasus"

=References=