Shah Deniz Costs Leave no Surplus for State Fund (Update)

(Adds 1H capex in para 3)

Azerbaijan's state oil fund Sofaz received no income from Shah Deniz in June or July, having had a total of $64mn from January to May, it said this week. Its May payment was $19mn.

Shah Deniz 1 daily produces about 30mn m³ of gas and 50,000 m³ of condensate, whose sale covers investment in the Shah Deniz 2. However, under the terms of the PSA contract, "zero profit" is not accepted either for the state, or for the companies. So far this year the partners have spent $1.87bn in 1H16 on SD2.

NGW learned that this question was raised in front of state oil company Socar and the project operator, UK major BP and was told that an official explanation is coming soon.

Shah Deniz platform (Credit: BP)

According to Sofaz, since gas production started at Shah Deniz in July 2007, Sofaz has received $2.51bn. The shareholders of the project Shah Deniz are BP (operator; 28.8%), Turkish TPAO (19%), Malaysia's Petronas (15.5%), Socar (10%), Russian Lukoil (10%), Iranian NICO (10%) and Socar subsidiary SGC Upstream (6.7%).

Azerbaijan desk