|
$170 million for Caspian gas field, pipeline projects
Loans to broaden energy supply to Azerbaijan, Georgia, Turkey
The EBRD is lending $170 million to SOCAR, the State Oil Company of
Azerbaijan, for two Caspian gas projects that will generate significant
revenues for the region and a more secure supply of energy for residents of
Georgia and Azerbaijan.
The Bank is lending $110 million towards the development of the Shah Deniz gas
field – the total cost of which is estimated at $4.3 billion – and $60 million
out of $1 billion needed for the South Caucasus gas pipeline. The loans will
assist SOCAR in participating in these important projects as a commercial
player. In Azerbaijan and Georgia the 690 km-long gas pipeline will be built
along the route of the Baku-Tbilisi-Ceyhan oil pipeline. That pipeline is
already under construction and the Azeri and Georgian sections of it are
partly financed by the EBRD. In Turkey the South Caucasus pipeline will
connect into the country’s existing gas distribution system.
These EBRD loans emphasise the importance of SOCAR in both projects in
unlocking the economic potential of the resource-rich Caspian region, said
Peter Reiniger, EBRD Business Group Director for Energy. Shah Deniz contains
an estimated 31trillion cubic feet of gas and 1.7 billion barrels of gas
condensate.
Mr Reiniger said the involvement of EBRD in this first commercial loan to
SOCAR should foster improved business and environmental standards within the
company. Participation in the projects also gives the EBRD a role in
monitoring construction and operation. The involvement of international
institutions will also underpin initiatives to ensure transparency and
monitoring of project revenues that are so important in the economic
development of Azerbaijan, one of the poorest countries in the EBRD’s region
of operations.
The two projects will mean increased, dependable access for Azerbaijan and
Georgia to gas as a source of energy and diversification of supply in the
Caucasus. The main client, the Turkish state energy company BOTAS, has
committed to buying 80 per cent of the gas but is expected to re-sell a good
portion of that in the Caucasus and possibly to Europe over the longer term.
Among the loan conditions that will help the EBRD promote Azerbaijan’s
transition to a market economy is the hiring of independent consultants,
funded by grants from the US government, to advise on reorganising and
commercialising the State Oil Company of the Azerbaijan Republic. SOCAR owns
10 per cent of each project along with BP (25.5 per cent), Statoil (25.5 per
cent), TotalFinaElf (10 per cent), LukAgip (10 per cent), NICO (10 per cent)
and the Turkish national energy company TPAO (9 per cent).
|
