Georgia and Shah Deniz consortium reach agreement on gas pipeline expansion to Europe

The Georgian government and the Shah Deniz consortium have reached an agreement on expanding a gas pipeline to supply gas from Azerbaijani Shah Deniz 2 field to Europe via Georgia, Georgian Prime Minister Bidzina Ivanishvili said at a large scale press conference with media today.

He added that $2 billion will be spent for the operations in Georgia, while the cheap gas volume received from Azerbaijan will be tripled. Many jobs will be created within the construction.

It is planned to construct a new infrastructure and expand the existing South Caucasus gas pipeline (Baku-Tbilisi-Erzurum) to supply Azerbaijani gas to Europe. It is assumed that a parallel gas pipeline will be built in Azerbaijan to increase its capacity to supply an additional 16 billion cubic meters of gas, while the capacity of pumping stations will be significantly increased in Georgia.

The total cost of the project of supplying Azerbaijani gas from Shah Deniz to Europe is estimated at more than $40 billion. Some $25 billion is envisaged for conducting offshore operations on the Shah Deniz project and $8-9 billion for the construction of the Trans-Anatolian gas pipeline (TANAP). The funds are also required to expand the South Caucasus gas pipeline.

The funds will be invested in the Trans-Adriatic gas pipeline project which was chosen last week as the gas supply route to Europe.

Reserves of the Shah Deniz field are estimated at 1.2 trillion cubic meters of gas.

The contract to develop the offshore Shah Deniz field was signed on June 4, 1996. Participants to the agreement are: BP (operator) - 25.5 per cent, Statoil - 25.5 per cent, NICO - 10 per cent, Total - 10 per cent, Lukoil - 10 per cent, TPAO - nine per cent and SOCAR - 10 per cent. (Trend)