July 2, 2018 / 12:26 PM / a year ago

BP starts first gas deliveries to Turkey from Azerbaijan's Shah Deniz II

FILE PHOTO: Logos of BP are on display at a petrol station in Moscow, Russia, July 4, 2016. REUTERS/Sergei Karpukhin/File Photo

BAKU (Reuters) - A BP (BP.L)-led international consortium started its first commercial deliveries of natural gas to Turkey from Azerbaijan’s giant Shah Deniz field from Saturday, BP said on Monday, part of efforts aimed at cutting Europe’s dependence on Russian energy supplies.

The European Union is trying to cut its reliance on Russian gas by developing the so-called Southern Gas Corridor, which is expected to bring about 16 billion cubic metres (bcm) of gas a year to Europe by 2020.

Russian gas has become increasingly politicised since 2014 when Moscow annexed the Crimea peninsula and rebellion flared in eastern regions of Ukraine. Russian gas giant Gazprom (GAZP.MM) caters for 34 percent of Europe’s gas market.

The gas would come from the Shah Deniz II field in Azerbaijan via the 1,850 km the Trans-Anatolian Natural Gas Pipeline (TANAP) through Turkey, the 487-km South Caucasus pipeline extension through Azerbaijan and Georgia and the 878 km Trans-Adriatic Pipeline (TAP) across Greece, Albania and Italy.

“BP as operator is very pleased that the longstanding partnerships we have in Azerbaijan and the entire region have allowed us to bring this world class project to success, enabling us to meet our commitments to consumers in Turkey,” Gary Jones, BP’s regional president for Azerbaijan, Georgia and Turkey, said in a statement.

BP said with an investment of some $28 billion, the project had a planned total of at least 26 subsea wells, two bridge-linked platforms, 500-km of subsea pipelines and flowlines, a major expansion at the Sangachal Terminal near the Azeri capital Baku and an expansion of the South Caucasus Pipeline.

“Start-up of Shah Deniz II is a milestone not just for Azerbaijan and the BP-led consortium, but for the Caspian as a whole region: a complex megaproject delivered on schedule and under budget,” Ashley Sherman, principal analyst, Caspian & Europe Upstream oil and gas, at Wood Mackenzie, said in a statement.

The Shah Deniz I field, which has been pumping gas since 2006, produces more than 10 bcm of gas per year, and output from Shah Deniz II is expected to reach an annual 16 bcm of natural gas, with 10 bcm earmarked for Europe and 6 bcm for Turkey.

Total production from the Shah Deniz fields will be up to 26 bcm of gas and up to 120,000 barrels of condensate a day, BP said.

Reporting by Margarita Antidze; additional reporting by Vladimir Soldatkin in MOSCOW; editing by David Evans

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