[Premium] Baku to Spend $1.3bn on SGC in 2018

Azerbaijan’s Southern Gas Corridor company (SGCC) has spent $8.6bn of its $11.5bn share of the giant pipeline project, including Shah Deniz stage 2, and will spend a further $1.3bn this year. This is about a half of last year's sum as several segments are now complete, SGCC CEO  Afgan Isayev told NGW. The company was set up to finance the state's share of the Southern Gas Corridor, as well as SD2, whose total costs add up to $41.5bn.

Azerbaijan plans to export 16.18bn m³/yr SD2 gas to Turkey (6bn m³/yr) and European Union by early 2021 through the SGC, comprised of the South Caucasus pipeline extension (SCPX), Trans Anatolian pipeline (Tanap) and Trans Adriatic pipeline (TAP).

Earlier, Socar told NGW that the project, all the way from SD2 to Eskisehir in western Turkey, is being tested and would be inaugurated in the autumn, probably in September.

Isayev said that SGCC has planned to invest $232mn in the SD1&2 and $144mn in SCPX. Tanap expenses are planned at $728mn, and TAP at $182mn in 2018.

"To date, SGCC has already mustered $8.6bn of the total amount of $11.5bn required to fulfill Azerbaijan's obligations under the above projects until 2020 inclusive. In 2017, SGCC invested $2.3bn in total," Isayev said. “About 98.8% of the works were done on SD2, as well as 100% of SCPX, 89.6% of Tanap and 62.6% of TAP.”

Isayev said that as of January 16, SGCC had attracted funds from the following sources to finance its share in the project:

1. Bonds for $2.5bn, issued by SGC and purchased by the State Oil Fund of Azerbaijan;

2. The authorised capital of $2.4bn, provided by the ministry of the economy and state Socar;

3. Issue of eurobonds with a nominal value of $1bn (first issue) in March 2016 and another issue of eurobonds with a nominal value of $1bn (second issue) in March 2017;

4. The International Bank for Reconstruction and Development (IBRD) lent $0.4bn and the Asian Bank for Infrastructure Investments (ABII) lent $0.6bn;

5. The European Bank for Reconstruction and Development (EBRD) lent $500mn;

6. The Asian Development Bank (ADB) lent $500mn;

7. The Asian Development Bank (ADB) lent a syndicated loan for $524.5mn, attracted on a guarantee basis.

Some 51% of the shares of Southern Gas Corridor CJSC belong to the state represented by the Ministry of Economy of Azerbaijan, and 49% to Socar.