MANILA, Dec. 7 (UPI) -- An estimated $1 billion in assistance will help Azerbaijan develop its flagship Shah Deniz complex in the Caspian Sea, the Asian Development Bank said.
Shah Deniz is one of the largest natural gas fields in the world. The ADB said about half of the $1 billion in public and private sector assistance would support a joint venture steering the Southern Corridor, a network of pipeline planned from the Caspian Sea.
The ADB, which has headquarters in Philippines, said the support is a testament to the importance of Shah Deniz to the Azeri economy and to European energy security.
"The expansion of the Shah Deniz gas field is key for Azerbaijan's economy, providing the country a long-term revenue stream and diversifying its gas exports to Europe," Sean O'Sullivan, a regional ADB director, said in a statement.
By the bank's estimate, the BP-led plans to expand Shah Deniz have a price tag of at least $26 billion. BP's regional subsidiary has already awarded billions of dollars in contracts to help move Azeri natural gas through pipelines headed toward Europe.
A review from the U.S. Energy Information Administration finds Azerbaijan has been a legacy oil producer, with some fields in production since the early 1950s. Natural gas reserves, meanwhile, exceed 30 trillion cubic feet and most of that is in the Shah Deniz field, tapped to feed the European market.
Europe relies heavily on Russia for natural gas and most of that runs through Soviet-era pipelines in Ukraine, which exposes the market to risk from the adversarial relationship between those two countries.
More than 500 billion cubic feet of natural gas per year is slated for exports from Shah Deniz to the European market through a network of 2,100 miles of pipelines in a few years.
Azerbaijan became a net gas exporter in 2007. The emergence of Shah Deniz is expected to provide a net stimulus to the nation's economy at a time when the ADB said the steep drop in energy prices is hitting Azerbaijan hard.
A separate $500 million was approved by the bank to help the country buffer against the crash in oil prices.