Shah Deniz Stage 2 (Azerbaijan)
The BSTDB provided a long-term loan to Lukoil Overseas Shah Deniz Ltd. for the second stage of the exploration and production project aiming to further develop the Shah Deniz offshore gas and condensate field in Azerbaijan.
The Shah Deniz offshore gas and condensate field (Shah Deniz) is situated in the South Caspian Sea. It is the largest natural gas field in Azerbaijan and one of the largest in the world. It commenced the production in 2006 (Shah Deniz Stage 1). The proposed investment is a continued field development of Shah Deniz that will add a further 16 billion cubic meters of gas production per annum (bcma) to the existing capacity of around 10 bcma currently available under the Shah Deniz Stage 1.
The Shah Deniz project is one of the largest off-shore gas development projects in Azerbaijan, seeking to nearly triple the gas production of the country and provide a boost to economic growth, which has flagged in recent years as previous oil and gas fields have peaked or matured.
Notwithstanding the increased dependency upon energy production which the project will surely bring, it has positive development impact on the Azerbaijani economy, increasing inflows of revenues and helping to improve living standards. Energy receipts are a particularly important source of revenue to the state budget, thus the project will also have a positive fiscal impact.
The operation has a considerable regional development impact through downstream benefits for Georgia and Türkiye, and potential benefits for Albania, Bulgaria and Greece.
BSTDB won an award from Infrastructure Journal Global magazine, a leading sector publication, for its involvement in Shah Deniz Stage 2 project. The Infrastructure Journal Global Awards recognize excellence, achievement and innovation in the energy and infrastructure finance. BSTDB won the magazine’s “European Oil & Gas Deal of 2015 Award” for providing the long-term financing for Borrower’s share in Shah Deniz Stage 2 project.
Total project cost: USD 2.8 billion
BSTDB amount: USD 60 million
Maturity: 12 years
Type of financing: project finance loan
