Azernews.Az

The cost of the second stage of developing the Shah Deniz gas field in the Azerbaijan sector of the Caspian Sea is now estimated slightly higher than before -- at $28 billion, the state energy firm SOCAR's head, Rovnag Abdullayev, has said.

Previously the project was estimated at $20-22 billion.

"We plan to implement scalable projects, one of which is the implementation of the Stage 2 project. Within the project, we will also start expansion of the South Caucasus Pipeline in the territory of both Azerbaijan and Georgia," Abdullayev said at a meeting with graduates of the company's summer school.

The Shah Deniz Stage 2 project will bring gas from the Caspian Sea to markets in Turkey and Europe. The progress made to date allows the consortium to maintain its target for first gas exports from Stage 2 project around the end of 2017.

Shah Deniz Stage 2, or Full Field Development (FFD), is a giant project that will add a further 16 billion cubic meters per year (bcma) of gas production to the approximately 9 bcma produced by Shah Deniz Stage 1. Over $25 billion in capital investment will be required to produce the gas and pipe it to the Turkish border. From there additional pipeline systems are planned to deliver 6 bcma of gas to Turkey and a further 10 bcma of gas to markets in Europe.

Shah Deniz Stage 2, one of the largest gas developments in the world, will help increase energy security of European markets through the opening of the South Gas Corridor.

Export of gas from the Shah Deniz Stage 2 will follow the same route as the current South Caucasus Pipeline (SCP) through Azerbaijan and Georgia. In Turkey, the gas will be transported through either the existing network or a new Trans-Anatolian-Pipeline (TANAP), which is to run across Turkey to its European Union border.

The Shah Deniz consortium is considering two export routes for transportation of gas further into Europe. The first option, Nabucco West, is planned to run from the Turkish-Bulgarian border to Bulgaria, Romania, Hungary and Austria. The second option is the Trans-Adriatic Pipeline (TAP), which will be designed to bring the Shah Deniz Stage 2 gas through Greece and Albania to Italy.

The Shah Deniz consortium aims to make a final decision between these options and to conclude related gas export agreements ahead of the project final investment decision planned for mid-2013.