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BP starts up Shah Deniz 2

Jul 02, 2018
3 min read
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UK oil giant BP has announced that with its partners it has started up the Shah Deniz 2 gas field development in Azerbaijan's section of the Caspian Sea, including its first commercial gas delivery to Turkey.

The BP-operated US$28 billion project is the first subsea development in the Caspian Sea and is the starting point for the Southern Gas Corridor series of pipelines that will for the first time deliver natural gas from the Caspian Sea direct to European markets.

BP group chief executive Bob Dudley said: “Shah Deniz 2 is one of the biggest and most complex new energy projects anywhere in the world, comprising major offshore, onshore and pipeline developments. BP and our partners have safely and successfully delivered this multi-dimensional project as designed, on time and on budget."

He added: “Together with the Southern Gas Corridor pipeline system, Shah Deniz 2 will deliver significant new energy supplies to Europe, further diversifying its sources of energy and providing new supplies of natural gas which will be essential in the energy transition.

Offshore, the Shah Deniz 2 project includes 26 subsea wells, 500km of subsea pipelines and flowlines and two new bridge-linked platforms. Gas is transported onshore through a 85 km pipeline to the Sangachal terminal near Baku, which underwent a major expansion to accommodate the new increased gas output.

At plateau, Shah Deniz 2 is expected to produce 16 billion cubic meters of gas per year (bcma) incrementally to current Shah Deniz production. Together with output from the first phase of development, total production from the Shah Deniz field will be up to 26 bcma of gas and up to 120,000 barrels of condensate a day.

Shah Deniz 2 is BP’s largest new upstream project in 2018, and, following Atoll in Egypt, is the second of six project start-ups expected for the year.

The project also includes the new South Caucasus pipeline expansion - 428km of new pipeline in Azerbaijan and 59km in Georgia, including two new compressor stations – carrying Shah Deniz gas to Turkey.

Ashley Sherman, principal analyst, Caspian & Europe Upstream oil and gas, at Wood Mackenzie, said: “The upstream phase is the cornerstone of the vast Southern Gas Corridor value chain, from the Caspian Sea to Italy, via Turkey. Shah Deniz has now started fulfilling its Phase Two gas contract with Turkey (6 billion cubic metres per year) via the new TANAP pipeline.

“What’s more, there are further Southern Gas Corridor milestones to come, as Shah Deniz Phase Two ramps up its gas and condensate output: completion of TANAP’s western section in 2019 and launch of the Trans Adriatic Pipeline – and Shah Deniz's 10 billion cubic metres per year of gas sales into the EU – in 2020.”

Bernard Looney, BP’s chief executive, Upstream, said: “Bringing this huge project online within the schedule and budget we set out at sanction 4½ years ago is further evidence of our focus on efficient and disciplined project execution. As our largest start-up for the year, Shah Deniz 2 is also a very important milestone in delivering our plans for growth, including from our pipeline of new higher-margin projects.”