ADB Supports $1 Billion Financing to Expand Southern Gas Corridor

The Asian Development Bank (ADB) has reported it will provide $1 billion in private and public sector assistance to expand Azerbaijan’s Shah Deniz II, one of the world’s largest gas fields. 

The assistance comprises a $500 million private sector loan to the Southern Gas Corridor Closed Joint Stock Company (SGC) and a $500 million sovereign-counterguaranteed partial credit guarantee. The guarantee will back $526 million in commercial loans made by a consortium of international banks to SGC, which is 51% owned by the Azerbaijan government and 49% by the State Oil Company of the Azerbaijan Republic (SOCAR).

The ADB says the assistance will provide additional revenues that the government can direct to social spending and to continued efforts to diversify the hydrocarbon-dependent Azerbaijan economy.           JSC SGC was created by the Presidential Decree in February 2014 with the purpose to finance the state's share in the project Shahdeniz-2 and export infrastructure: expansion of the South Caucasus Pipeline, TANAP and TAP.

* The cost of the project Phase-2 of the development of Shah Deniz is currently estimated at $ 23.8 billion. The annual volume of production in Phase 2 will make 16 bcm per year, of which 10 billion will be sent to Europe, and 6 billion to Turkey. Gas supplies to Europe will start in 2020.

Participants of the Shah Deniz project also are: BP (operator, 28.8%), SOCAR (16.7%), Petronas (15.5%), Lukoil (10%), NICO (10%) and TPAO (19%).