The Asian Development Bank (ADB) is set to provide $1bn in financing for the expansion of the Shah Deniz II gas field in Azerbaijan.
The financing includes a $500M private sector loan to the Southern Gas Corridor Closed Joint Stock Company (SGC) and a $500M sovereign-counterguaranteed partial credit guarantee.
The Shah Deniz II expansion project, estimated to cost over $26bn, will be located in the Caspian Sea, at about 70km from Baku.
The project will raise the field’s gas production capacity from about 10bn cb m to 26bn cb m annually. The additional gas produced will be exported through a chain of pipelines, named the Southern Gas Corridor, through Georgia and Turkey to Greece, Albania, and Italy.
The project is being developed by a consortium of companies, with BP being responsible for the construction and operation of the project facilities.
Michael Barrow, director general of ADB’s private sector operations department, said: “ADB, through its private sector window, has already demonstrated strong support to the Shah Deniz gas field expansion through its direct assistance to this project in 2015.
“The proposed assistance to Southern Gas Corridor is a continued testament to ADB’s belief in the development impact of this important project, and the importance of crowding in commercial capital to support Azerbaijan’s funding needs for the project.”
The development is expected to create 19,000 jobs during the construction phase, and 1,800 permanent jobs once completed. Production is anticipated to commence in 2018.
* Data provided by Timetric's Construction Intelligence Center.