Project description
and objectives:
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The proposed financing is to fund a portion of the State Oil Company of
Azerbaijan Republic's (SOCAR's) share of cash calls relating to the
development of the off-shore Shah Deniz gas/gas condensate field (SD) in
Azerbaijan in accordance with the SD PSA. SOCAR holds a 10% interest in SD
field via its subsidiary, AzSD.
Financing is being sought for stage 1 of a 4-stage field development (volume
target is 11.9 Tcf gas-in-place). Initially 9 wells will be drilled from a
fixed offshore platform. After processing onshore, gas will be sold to
Azerbaijan at the gates of the Sangachal terminal and via the South Caucasus
Pipeline (SCP) exported to Georgia and Turkey. Condensate will be exported to
the world market via the BTC pipeline.
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Transition impact:
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The country strategy for Azerbaijan (BDS/AZ/02-1) calls for the Bank to
enhance co-operation with SOCAR and to promote its commercialisation through
the provision of commercial financing. The key transition impacts of the AzSCP
financing are:
Commercialisation of SOCAR - the proposed financing of SOCAR's
subsidiary will provide the Bank with the opportunity to assist with SOCAR's
corporatisation and commercialisation. Based on the agreed conditionality,
which has been defined in close co-operation with the World Bank and the IMF,
the envisaged financing and a complementary technical assistance operation
will lead to improved financial transparency, the implementation of
commercialisation and restructuring measures. It will also clarify the
relationship between the State and the state-owned commercial company SOCAR.
Competition - the realisation of the SD project will substantially
increase competition in the Azerbaijani, Georgian, Turkish and, in the
medium-term, the gas markets in south-eastern Europe.
Demonstration Effect - the SD operator BP is setting standards in
governance and business conduct in such areas as operational management,
technology, financial transparency, disclosure of payments to the government,
health, safety, environmental protection and procurement practices.
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The client:
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AzSD is SOCAR's 100% subsidiary holding its 10% interest in the SD PSA. SOCAR
is the state-owned joint stock company responsible for the development of
Azerbaijan's petroleum sector. According to terms of the SD Joint Operating
Agreement, BP has been appointed as operator for the upstream development of
SD.
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EBRD finance:
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US$ 110 million, senior loan (of which up to US$ 40 million will be syndicated
post-signing).
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Total project cost:
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Total SD stage 1 project cost estimate is US$ 2,263.8 million.
AzSD
stage 1 project cost estimate is US$ 256.5 million.
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Environmental impact:
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The Project was classified as A/1, requiring the completion of Environmental
Impact Assessments (EIAs). The EIA has been approved by the Azerbaijan
government, and is consistent with EBRD environmental Policies and Procedures.
The EIA contains the details for hundreds of environmental mitigation measures
that will be implemented to minimise environmental impacts caused by
construction and operation of the project.
The EBRD has received the right to sit on the Board of Directors (as a
non-voting observer) to ensure that AzSD abides by its environmental
undertakings as outlined in the Term Sheet and detailed in the Environmental
and Social Action Plan which has formed part of the environmental
documentation available to the public for review and comment. EBRD has worked
with the sponsor to develop a rigorous monitoring program using in house staff
and independent environmental consultants to ensure adequate implementation of
the measures. The Team continues to work towards the introduction of a
National Oil Spill Response Plan.
The ESIA, ESAP and other related documents can be viewed at
www.caspiandevelopmentandexport.com/ASP/PD_SD.asp or on the EBRD
website.
There is an Environmental Impact Assesment available for this project.
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Technical
cooperation:
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TC project (TCS ID 13188) - Commercialisation and restructuring of SOCAR - was
initially approved by TC Com on 9 April 2003 and re-approved, with 2-stage
approach, on 5 November 2003.
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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Company contact:
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State Oil Company of Azerbaijan Republic
73 Neftchilyar pr.
Baku
370004
Azerbaijan
or
Mr. Raymond Conway
Senior Banker
EBRD
e-mail: conwayr@ebrd.com
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EBRD contact:
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Olwyn Buldhoo, Operation Leader: buldhooo@ebrd.com
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Business opportunities:
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For business opportunities or procurement, contact the client company.
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General enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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