Shah Deniz Enters "Second Stage"

The second stage of the Shah Deniz project has been officially launched in Baku, Azerbaijan today, marking an "important milestone" for the project, operator BP said.

BP made the announcement in a statement today following a meeting between Azeri president Ilham Aliyev and Group Chief Executive of BP, Bob Dudley.

As of today, work will begin on the Front End Engineering and Design (FEED) of the field, during which the consortium will finalise commercial agreements and engineering reports and drill additional wells. The announcement also sees the commencement of construction contracts on the project.

The second phase will also see the consortium choose the winning pipeline to transport gas from the $25 billion field to Europe.

"We are pleased to announce this major step forward," President of the Azerbaijan, Georgia and Turkey Region of BP Rashid Javanshir said. "Over the past two years we have made substantial progress on all the individual components of this mega-project...

"With over 30 trillion cubic feet of gas resources, Shah Deniz is truly a giant field. And with more than 26 wells, two new platforms, a terminal expansion and up to 4000km of new pipelines to Europe, this chain of major projects represent one of the largest oil and gas developments in the world."

The consortium expects the opening of the second phase of the project to build on its current output from the first stage of the project. Output is expected to rise to 25 billion cubic of metres (bcm) a year, adding 16bcm to the current output of 9bcm.