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Cost for Shah Deniz II tops $28 billion

Jan. 2, 2013 at 9:38 AM

BAKU, Azerbaijan, Jan. 2 (UPI) -- The second phase of the Shah Deniz natural gas field offshore Azerbaijan should cost as much as $30 billion, the head of a state energy company said.

British energy company BP leads a consortium developing the Shah Deniz natural gas field in the Azeri waters of the Caspian Sea alongside the State Oil Co. of Azerbaijan and its European counterparts.

SOCAR President Rovnaq Abdullayev said Shah Deniz II should start delivering natural gas to European consumers by the end of 2017 once final investment decisions are made.

"In total, the second phase of Shah Deniz will cost $28 billion to $30 billion," he was quoted by Bloomberg News as saying.

A previous cost estimate was $25 billion, though SOCAR's president didn't provide an explanation for the increase.

The BP-led consortium is expected soon to make its decision on pipeline options for Shah Deniz II. Nabucco West, a 48-inch, 807-mile pipeline through Bulgaria, Romania, Hungary and Austria, is up against the Trans-Adriatic Pipeline to secure natural gas from Azerbaijan.

European leaders see Azerbaijan as a source of energy security. Russia supplies about 20 percent of the natural gas for European consumers and conventional pipeline options through Ukraine are fraught with political risk.

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