UPDATE 1-BP targets 2018 for first gas from Shah Deniz II

Wed Jan 23, 2013 10:51am EST

By Afet Mehdiyeva and Lada Evgrashina

BAKU Jan 23 (Reuters) - British major BP said it is targeting 2018 for the first gas from the second phase of Azerbaijan's Shah Deniz gas project, a major development aimed at reducing European dependence on Russia for its energy supplies.

Output from Shah Deniz II is expected to reach 16 billion cubic metres (bcm) of natural gas per year, with 10 bcm earmarked for Europe and 6 bcm for Turkey.

Shah Deniz I, which has been pumping gas since 2006, has production capacity of 8 bcm.

Shah Deniz, Azerbaijan's biggest gas deposit which is being developed by BP, Statoil, Azeri state energy firm SOCAR and others, is estimated to contain 1.2 trillion cubic metres of gas.

If all necessary agreements are achieved, "we will target 2018 for first gas (from Shah Deniz II)," Al Cook, BP-Azerbaijan vice-president, told a news conference.

Officials from SOCAR had said the second phase was expected to start by the end of 2017, but SOCAR head Rovnag Abdullayev said in December the gas would reach European markets "not earlier than the second quarter of 2018."

The Shah Deniz consortium is expected to choose by mid-2013 whether to transport Shah Deniz II production via the Nabucco-West pipeline or the rival Trans-Adriatic pipeline (TAP).

After a deal signed earlier this month the consortium owns stakes in both pipeline projects.

Cook welcomed ratification by Azerbaijan and Turkey of the linked Trans-Anatolian (TANAP) gas pipeline agreement, which will bring Azeri gas through Turkey to the edge of Europe.

TANAP will connect with either Nabucco West into Austria or TAP, taking a more southern route via Greece and Albania into Italy to reach customers in the European Union.

Cook said the Shah Deniz consortium planned to invest $10 billion on the Shah Deniz II project.

"Over the next 18 months, in 2013 and the first half in 2014 Shah Deniz plans to make commitments to spend $10 billion on this project. BP on behalf of the consortium plans to make commitments to spend $10 billion," he said.

TAP's shareholders are EGL AG of Switzerland, which has 42.5 percent, Norway's Statoil (42.5 percent) and Germany's E.ON Ruhrgas (15 percent).

Nabucco's six shareholders are Austria's OMV AG, Germany's RWE AG, Hungary's MOL through its gas pipeline operator FGSZ, Turkey's Botas, BEH of Bulgaria and Romania's Transgaz.

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