Azerbaijan Goes on Roadshow for SGC
Azerbaijan has started meetings with potential investors in the UK and the US to raise $1bn as part of its share of the $45bn southern gas corridor (SGC).
The SGC enjoys the strong support of the European Union and US as an alternative energy source to Russia and one that serves the energy security of Europe.
According to the finance ministry, the meetings started March 9 in London and will continue in New York, Los Angeles, San Francisco and Boston until March 16.
The delegation, which includes representatives of the state-owned Southern Gas Corridor Company (SGCC) and the energy company Socar, is led by the finance minister, Samir Sharifov.
“Depending on market conditions, the issue of SGCC bonds under the state guarantee is expected to raise $1bn,” the finance ministry statement said.
The funds will be used for financing Azerbaijan's stakes in development of stage 2 of Shah Deniz field, as well as building the South Caucasus expansion (SCPX), the Trans Anatolian (Tanap) and Trans Adriatic (TAP) gas pipelines.
"Citi Bank, UniCredit and JP Morgan were defined as authorized for the placement of the bonds. Lazard Freres SAS acts as financial advisor," the ministry said.
Despite the challenges that face the country, including the dramatic fall in the oil price that has led to a budget deficit and the halving in value of the manat, the national currency, and the loss of a big chunk of foreign exchange reserves, Azerbaijan feels confident that the more than $30bn of reserves left in the state oil fund (Sofaz) will be able to support the economy.
There are no problems with funding the SGC, energy minister Natig Aliyev said March 11. "At the same time, international financial institutions have also expressed an interest in financing SGC," he said.
The country's share in SGC has been funded by Sofaz, according whose budget it will invest about $1bn in the project this year. SGCC is 51% owned by the government and 49% by Socar.
The company has to contribute about $12bn to SGC over the next few years to fund its share of the second phase of the Shah Deniz field and the associated chain of pipelines from the Caspian to Europe.
Kama Mustafayeva