Commission welcomes investment decision to extract gas pledged for Europe

The European Commission welcomed today's final investment decision (FID) on extracting gas from the Shah Deniz II gas field in Azerbaijan. With this long-awaited decision, it is confirmed that Europe will get 10 billion cubic metres (bcm) per year starting from end 2019. All decisions taken so far - including to choose TAP as pipeline to bring gas to Europe - were conditional on this final investment decision.  

EU Commission President Jose Manuel Barroso said: "Today's decision by the Shah-Deniz-II-Consortium is a strategic door opener for stronger European energy security. Building on the Joint Declaration I signed with President Aliyev in January 2011, this important step will give the EU direct access to gas from the Caspian basin. This is a major milestone for the diversification of our energy supplies, to the benefit of European consumers and businesses."

EU Energy Commissioner Gunther Oettinger said: "This decision to open the Southern Gas Corridor is a real breakthrough. Through its further enlargement, the corridor will have the potential to meet up to 20 per cent of the EU's gas needs in the long term."

An official signing ceremony was held in Baku today in the presence of Azerbaijan's President Ilham Aliyev, EU Energy Commissioner Gunther Oettinger and others. More than 18 billion Euro will be invested in platforms and subsea wells to extract 16 bcm of gas in water depths of 500 meters in the Caspian sea. Following earlier agreements, starting from the end of 2019 6 bcm will be delivered to Turkey, 10 bcm to Europe. 

In June 2013, the Shah-Deniz-II-Consortium, which holds the licence to extract the gas from the gas field, had chosen the Trans-Adriatic Pipeline (TAP) to bring the gas from the Turkish border via Greece and Albania to Italy. 

Also the sales agreements for the 10 bcm pledged for Europe have been signed already in September 2013. Nine companies will purchase the gas in Italy, Greece and Bulgaria: Axpo Trading AG, Bulgargaz EAD, DEPA Public Gas Corporation of Greece SA, ENEL Trade SpA, E.ON Global Commodities SE, Gas Natural Aprovisionamientos SDG SA, GDF SUEZ SA, Hera Trading srl, and Shell Energy Europe Limited. 

The resolution to construct TAP has also been made earlier this year. 

It had also been decided earlier that the gas will be shipped via the upgraded "South Caucasus Pipeline" through Georgia and via TANAP, a completely new  2000-km-long-pipeline, through Turkey until its Western borders. SOCAR (Azerbaijan) is the main shareholder of the TANAP pipeline. 

Investment costs of building and upgrading of all the pipelines and the development of the gas field will be around 30 Billion Euro. The shareholder of TAP are: BP, SOCAR Statoil, Fluxys, Total, E.ON and Axpo. One of the main shareholder of the Shah-Deniz-II-Consortium is BP. -0-