Following the inauguration ceremony of the Southern Gas Corridor project (“SGC”) held on 29 May 2018, the General Director of Southern Gas Corridor CJSC (“SGC CJSC”), Afgan Isayev, participated in the International Caspian Oil & Gas Conference on 30 May 2018 in Baku and provided updates with respect to the works carried out under each project, comprising SGC, and the financing activities SGC CJSC has been engaged in.

Overall progress to the 1^st Gas under Shah Deniz Stage 2 project is over 99.0%, SCP Expansion project - 100.0% (to the 1^st Gas), TANAP project – 94.0% and TAP project – 72.9%. The construction works are successfully progressing. The total cost of Shah Deniz Stage 2 project is currently estimated to be US$22.7 bln (US$17.7 bln spent as of the end of April 2018), SCPX project - US$4.5 bln (US$4.2 bln spent as of the end of April 2018), TANAP project - US$8.0 bln (US$5.4 bln spent as of the end of April 2018), and TAP project - EUR 4.5 bln (EUR 2.9 bln spent as of the end of April 2018).

Mr. Isayev noted that the leading international financial institutions, such as the International Bank for Reconstruction and Development, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development, and Asian Development Bank, have already provided financial support to SGC CJSC for its commitments in the project. SGC CJSC’s share for the financing of SGC value chain (net of revenues from existing Shah Deniz 1 and SCP projects) till 2020 inclusive is estimated to stand at US$11.5 bln, US$9.0 bln of which (over 78%) had already been invested as of the end of April 2018. Out of the amount already spent, approximately US$0.5 bln has been invested since the beginning of 2018.

As of 30 April 2018, the SGC CJSC had attracted the funds from the following sources to finance its stakes in the SGC value chain:

• Issuance of bonds by SGC CJSC to SOFAZ, for a total amount of US$2.5 bln;
• Equity injections from the Ministry of Economy and SOCAR for a total amount of US$2.4 bln;
• Placement of an inaugural Eurobond in the amount of US$1.0 bln in March 2016 and a tap of the Eurobond for US$1.0 bln in March 2017;
• Financing from IFIs and commercial banks.

The main purpose of SGC is the full-field development of Shah Deniz gas-condensate field (or Shah Deniz Stage 2) and subsequent delivery of the gas to be produced under the project via SCPX, TANAP and TAP to Turkey and Southern Europe.

The entity holding and managing the participating interests of the Republic of Azerbaijan in the SGC is SGC CJSC, which was incorporated pursuant to Presidential Decree No. 287 “On relevant measures related to the second stage of the operation of Shah Deniz gas-condensate field and establishment of the Southern Gas Corridor with regard to other projects” dated 25 February 2014. 51% of SGC CJSC’s share capital is held by the Ministry of Economy of the Republic of Azerbaijan and 49% by SOCAR.

The Southern Gas Corridor project inaugurated in Azerbaijan.

An official ceremony marking the inauguration of the Southern Gas Corridor (“SGC”) was held, today, 29 May 2018, at the Sangachal Terminal near Baku.

Ilham Aliyev, President of the Republic of Azerbaijan, attended the ceremony and by opening a symbolic valve formally inaugurated the SGC value chain across Azerbaijan and Georgia aimed at delivering first commercial gas to Turkey next month.

The President of Azerbaijan expressed his gratitude to the Turkey, Georgia, US, UK, EU for political and economic backing of the SGC, as well as to the banks providing financial support to the project participants enabling the realisation of the SGC.

Bernard Looney, from BP, on behalf of the Shah Deniz consortium, also emphasized the importance of the value chain to all stakeholders, the successful delivery of the project by Shah Deniz consortium, and acknowledged the ongoing support of the President of Azerbaijan, the government and SOCAR in its implementation.

The main purpose of the SGC is the full-field development of Shah Deniz gas-condensate field (or Shah Deniz Stage 2) and subsequent delivery of the gas to be produced under the project via SCPX, TANAP and TAP to Turkey and Southern Europe. 12 June 2018 will mark the opening of the next leg of SGC – TANAP at Eskishehir, Turkey.

The entity holding and managing the participating interests of the Republic of Azerbaijan in the SGC is Southern Gas Corridor CJSC (“SGC CJSC”), which was incorporated pursuant to Presidential Decree No. 287 “On relevant measures related to the second stage of the operation of Shah Deniz gas-condensate field and establishment of the Southern Gas Corridor with regard to other projects” dated 25 February 2014. 51% of SGC CJSC’s share capital is held by the Ministry of Economy of the Republic of Azerbaijan and 49% by SOCAR.

On 22 December of the current year, loan and guarantee agreements were signed for granting a syndicated loan facility in the amount of US$524.5 million backed with the guarantees of Azerbaijani state (sovereign guarantee) and Asian Development Bank (ADB) to “Southern Gas Corridor” CJSC (SGC) for the purpose of supporting the development of Shah Deniz gas and condensate field (Shah Deniz project).

The aforementioned guarantee agreement was signed by the Finance Minister Samir Sharifov on behalf of the Azerbaijani state, and the loan agreement was signed by SGC’s General Director Afgan Isayev.

It should be noted that earlier, in May 2017, a direct loan in the amount of US$500 million backed with the sovereign guarantee and with a tenor of 15 years, was allocated by ADB to SGC for the financing of Shah Deniz project.

ADB was founded in 1966 and is composed of 67 member-countries. Azerbaijan became a member of ADB on 22 December 1999. In 2015 Azerbaijan hosted the 48th Annual Meeting of the Board of Governors of ADB.

SGC’s General Director Afgan Isayev having noted that Southern Gas Corridor project will secure Azerbaijan’s long-term, successful and sustainable development, gave information in relation to the works done in this direction: “The leading international financial institutions, represented by the International Bank for Reconstruction and Development, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development and Asian Development Bank (via a direct loan), have already provided their support for the Southern Gas Corridor project. SGC’s share for the financing of the Southern Gas Corridor (including the existing Shah Deniz 1 and SCP projects) till 2020 inclusive is US$11.5 billion, out of which US$8.4 billion or roughly 73% has already been invested. Out of this amount, US$2.3 has been invested from the beginning of the year. Within Southern Gas Corridor project, overall progress to the 1st Gas under Shah Deniz Stage 2 project is 98.5%, under the South Caucasus Pipeline Expansion (SCPX) project - 99.2% (to the 1st Gas), for Trans-Anatolian Pipeline (TANAP) project – 87.4% and for Trans Adriatic Pipeline (TAP) project – 60.8%. The construction works are successfully progressing.”

The main purpose of the Southern Gas Corridor project is the full-field development of Shah Deniz gas-condensate field (or Shah Deniz Stage 2) and subsequent delivery of the gas to be produced under this project via SCPX, TANAP and TAP to Turkey and Southern Europe.

“Southern Gas Corridor” CJSC was incorporated pursuant to Presidential Decree No. 287 “On relevant measures related to the second stage of the operation of Shah Deniz gas-condensate field and establishment of the Southern Gas Corridor with regard to other projects” dated 25 February 2014; 51% of SGC’s capital is held by the Ministry of Economy of the Republic of Azerbaijan and 49% of the capital is held by SOCAR.

On the 20th of October of the current year a loan agreement in the amount of US$500 million for the financing of TANAP project was signed between “Southern Gas Corridor” CJSC (SGC) and European Bank for Reconstruction and Development (EBRD).

The aforementioned loan agreement was signed by SGC’s General Director Afgan Isayev and the Director of Energy and Natural Resources for Russia, Caucasus and Central Asia region at EBRD, Aida Sitdikova, while the Guarantee Agreement in relation to the loan agreement was signed by the Minister of Finance of Azerbaijan Republic Samir Sharifov and Aida Sitdikova.

It should be noted that earlier, on the 18^th of October of 2017, the Board of Directors at EBRD approved the allocation of US$500 million to SGC under the loan agreement, backed with the sovereign guarantee, for the financing of TANAP Project.

SGC’s General Director Afgan Isayev having noted that Southern Gas Corridor Project will serve the delivery of Azerbaijani gas to global energy markets and will provide significant contribution to the development of the national economy, gave information in relation to the works done in this direction: “The leading international financial institutions, represented by the International Bank for Reconstruction and Development, Asian Infrastructure Investment Bank and Asian Development Bank, have already provided their support for the Southern Gas Corridor project. SGC’s share for the financing of the Southern Gas Corridor (including the existing Shah Deniz 1 and SCP projects) till 2020 inclusive is US$11.8 billion, out of which US$7.8 billion or roughly 66% has already been invested. Out of this amount, US$1.9 has been invested from the beginning of the year. Within Southern Gas Corridor project, overall progress to 1^st Gas under Shah Deniz Stage 2 project is 96%, 98% (to 1^st Gas) under the South Caucasus Pipeline Expansion (SCPX), 82% for TANAP and 53% for Trans Adriatic Pipeline (TAP) projects. The construction works are successfully progressing.”

The main purpose of the Southern Gas Corridor project is the full-field development of Shah Deniz gas-condensate field (or Shah Deniz Stage 2) and subsequent delivery of the gas to be produced under this project via SCPX, TANAP and TAP to Turkey and Southern Europe.

“Southern Gas Corridor” CJSC was incorporated pursuant to Presidential Decree No. 287 “On relevant measures related to the second stage of the operation of Shah Deniz gas-condensate field and establishment of the Southern Gas Corridor with regard to other projects” dated 25 February 2014; 51% of SGC’s capital is held by the Ministry of Economy of the Republic of Azerbaijan and 49% of the capital is held by SOCAR.