Production Sharing Agreement (PSA) for exploration, development and production of Shah Deniz prospective area in the Azerbaijani sector of the Caspian Sea was signed between SOCAR and international oil and gas companies on 04 June 1996. To date under Shah Deniz Stage 1 project (“SD1”) 10 out of 12 wells have been drilled, a platform, Sangachal terminal constructed and South Caucasus Pipeline (“SCP”) of 692 km in length laid to Turkey. Natural gas from the Shah Deniz field is transported via subsea pipelines to the Sangachal Terminal located on the coast of the Caspian Sea 55 kilometres south of Baku. From the Sangachal Terminal’s gas processing facilities gas is then transported to SOCAR’s pipeline, which is connected to Azerbaijan’s national grid system while the remaining gas is exported via SCP. First gas sales started in 2006.
Full-field development of Shah Deniz gas-condensate field or Shah Deniz Stage 2 (“SD2”) is one of the largest and most complex gas projects in the world and the first subsea infrastructure in the Caspian Sea. SD2 will add another 16 bcm of natural gas per annum and up to 105 thousand barrels of condensate per day to about 10.9 bcm of natural gas per annum and up to 50 thousand barrels of condensate per day currently produced from SD1. 6 bcm of gas produced from SD2 will be supplied to Turkey per annum, while 10 bcm per annum to the European consumers, thereby serving strategic interests related to sustainable energy security of the European countries and Turkey.
Gas Sales Agreements were signed between Shah Deniz Consortium and 9 European Companies on 19 September 2013. The Final Investment Decision was made on 17 December 2013. Initial gas export to Turkey is planned in 2018, and to Europe in 2020.