Statoil makes final Shah Deniz Stage 2 investment decision

Statoil

With its partners in the Shah Deniz consortium in Azerbaijan, Statoil ASA (OSE:STL, NYSE: STO) has made a final investment decision for the Stage 2 development of the Shah Deniz gas field in the Caspian Sea offshore Azerbaijan. Statoil also enters an agreement to divest a 10% share of its 25.5% holdings in Shah Deniz and the South Caucasus Pipeline.

The BP-operated Shah Deniz consortium today announced the final investment decision for the Stage 2 development of the Shah Deniz gas field. This decision triggers plans to expand the South Caucasus Pipeline (SCPX) through Azerbaijan and Georgia to construct the Trans Anatolian Gas Pipeline (TANAP) across Turkey and to construct the Trans Adriatic Pipeline (TAP) across Greece, Albania, and into Italy. Together these projects will create a new Southern Gas Corridor to Europe. The total cost of the Shah Deniz Stage 2 and SCP Expansion projects will be around $28 billion.

Statoil has today also signed an agreement to divest a 10% share of its 25.5% holdings in the Shah Deniz and the South Caucasus Pipeline. The buyers are SOCAR (6.7%) and BP (3.3%). Statoil will, as part of this transaction, receive a total cash consideration of $1.45 billion. The effective date of the transaction is January 1, 2014.

Statoil will not participate as an investor in TANAP. The company holds a 20% share in TAP AG, the owner of Trans Adriatic Pipeline (TAP), which develops the pipeline for transport of gas from Turkey to Southern Europe.

The current Statoil equity production (gas and condensate) from Shah Deniz as per third quarter 2013 is 56,000 barrels of oil equivalents per day.

The Shah Deniz Stage 2 project includes offshore drilling and completion of 26 subsea wells and construction of two bridge-linked platforms. Onshore, there will be new processing and compression facilities at Sangachal. 16 billion cubic meters a year (bcma) of gas produced from the Shah Deniz Stage 2 project will be carried some 3,500 kilometers to provide energy for millions of consumers in Georgia, Turkey, Greece, Bulgaria, and Italy. First gas is targeted for late 2018, with sales to Georgia and Turkey. First deliveries to Europe will follow approximately a year later.

Statoil entered Azerbaijan in 1992 and is a partner with a 8.56% share in the oil producing Azeri-Chiraq-Guneshli (ACG) field, the Shah Deniz gas field with a 15.5% share, and the corresponding pipelines Baku-Tbilisi-Ceyhan (BTC) and South Caucasus Pipeline (SCP).



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