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 11 out of 12 wells have been drilled under Shah Deniz Stage 1 project (“SD1”). 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. Gas is then transported from the Sangachal Terminal’s gas processing facilities through pipelines to Azerbaijan’s national grid system, while the remaining gas is exported via SCP. First gas sales under SD1 project 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. At plateau, SD2 is expected to produce 16 billion cubic meters of gas per year (bcma) incrementally to current Shah Deniz production. Together with output from the first phase of development, total production from the Shah Deniz field will be up to 26 bcma of gas and up to 120,000 barrels of condensate a day. 6 bcma of gas produced from SD2 is supplied to Turkey, while 10 bcma 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 on SD2 project was made on 17 December 2013. Commercial gas deliveries to Turkey and Europe commenced on 30 June 2018 and 31 December 2020, respectively.