PROJECT'S COST OF "SHAH DENIZ" INCREASED FOR 25 %
2004 is very important for Azerbaijan, the year of changes. These words, on December 14 were said by the president of the European Bank of Reconstruction and Development (EBRD) Jan Lemyer, at the conference of "Commercial and investments in Azerbaijan", carrying out within the bounds of official visit of the president of Azerbaijan Ilham Aliyev in London, Great Britain.
The presence of oil and gas is well, however these factors can bring both benefit and harm. Major countries, with rich oil and gas, are not able to achieve the progress, to bring to their people of well-being. According to the results of numerous discussions in Baku, J. Lemyer declared at the conference that Azerbaijan is going to direct of these rich resources for the boon of the people and country. Azerbaijan is rich by oil and gas, located in unique territory which is taking place between Central Asia and Europe, closer to Russia, that on the one hand is advantage, and so as there are a lot of regional problems, represents the complexity on the other.
Other matter is connected with transparency. There is paid attention the fact, that Azerbaijan joined to initiative of transparency in the mineral industry. As the result, on January, the first report will be published connected with this initiative. The third initiative is connected with structural transformations in SOCAR, that is very important element. Multi economy of problem, transparency, structural transformations in the companies, increase of work quality of the companies and other - all this is extremely important for the international institutes. As a whole, there is formed the positive, complete opinion and for useful activity of an opportunity in Azerbaijan, emphasized J. Lemyer.
The president of Azerbaijan Ilham Aliyev thinks, that the presence of resources does not mean, that the natural riches will serve to country and people, to promote strengthening of its positions and political rate. The development of oil and gas fields represented for Azerbaijan the other important sense, in particular of attraction of the investments. Using the factor of oil and gas, Azerbaijan became the country, which authority in region constantly grows. Today, there can not be carried out of any project in region without Azerbaijan, without personally participation of our country. Using the development of oil and gas sector, Azerbaijan has strengthened the economic situation, that promoted of strengthening of the political positions in country.
Alongside to multi economy profile, there is given the large meaning to improvement of daily life of the population in Azerbaijan. I. Aliyev emphasized that people should feel original changes of parameters by internal total product in the daily life. "We aspire to presenting to our people of the best life, to solve their daily problems, to reduce their cares. At the same time, we aspire and development of an infrastructure, spheres of service. And economic potential is necessary for achievement it, we should have high image among the international public", - said I. Aliyev.
I. Aliyev thinks, that Azerbaijan should win a rank of the reliable partner among the international financial structures. The strategic way, political rate, the priorities of economic development of the country remain low. This constant policy begun by the national leader Heydar Aliyev, and current policy has proved the efficiency.
"We should create for the people the best conditions. If we not to fulfill the development of areas, development of non oil sector, we will not be able to achieve successes", - said I. Aliyev. We used the factor of oil for the successful decision of tasks appeared in agenda", - continued the president of state. Today the basic priority is all-round development of economy.
As I. Aliyev stated, "to get of trust of the foreign investors, are necessary the years, and probably decade. At the same time the unique incorrect step can all spoil. Fortunately, Azerbaijan has not undertaken erroneous steps, has made known I. Aliyev and expressed the reliance, as henceforth will not allow of mistakes. "Therefore, I once more again appeal of all potential investors to invested in all branches of Azerbaijan economy. Arrive to Azerbaijan, study of the terms, get acquainted with an economic, social, political situation. Our country is very convenient for residing of the foreigners", - the president of Azerbaijan summarized the statement.
Some more $ 1,1 bn. to Shah Deniz
At the same day, at the building of the European Bank of Reconstruction and Development under the management of the president of Azerbaijan Ilham Aliyev was held the ceremony of signing of credit agreement by the project Shah Deniz. European Bank of Reconstruction and development and SOCAR signed the credit agreement for $ 170 mln. in London. The documents were signed, from Azerbaijan party by deputy minister Abid Sharifov and the president of SOCAR Natig Aliyev, and director of EBRD's business-group Pitter Reininger. "Loans will assistance to SOCAR in the participation in these importance projects as a commercial party", - is said in EBRD.
BP Azerbaijan and partners for "Shah Deniz" gas condensate field development were considering increasing of project estimate at 25%, stated BP Press-Service. At moment first stage and the construction of the South Caucasus gas line is estimated at $ 4.3 bn then primary value has been amounting to $3.2 bn. BP informed that the reasons of rising of project price would be declared later. Besides the South Caucasus gas line, first stage of field development project involved the construction of TPG 500, subsea gas line, drilling of wells and expansion of Sangachal terminal.
EBRD had allocated a loan of $170 m for funding of 10% participation of State Oil Company of Azerbaijan Republic (SOCAR) in "Shah Deniz" and the construction of the South Caucasus gas line. It has been lent $110 m for financing of SOCAR participation in the project and $60 m for the South Caucasus gas line. Overall participation of SOCAR in "Shah Deniz" with change of its estimate is amounting to $330 m and the South Caucasus gas line - $100 m.
Before the price of the construction of Baku-Tbilisi-Ceyhan, the main export pipeline had risen that was explained by BP with rise in price of oil price, the construction activities and materials. The rise in price of "Shah Deniz" is also connected with increasing of world energy prices and the construction materials.
The price increasing in the project of Shah Deniz also connected with the matters of world prices increasing to energy carrier and construction's materials. To construction of TPG-500 platform fabrication demanded 15,000 tons of metal. But these works were implemented before announcing rise of prices for the project at shipyards of Keppel Fels, BP contractor for fabrication of the hull and modules of topsides for the offshore platform. All the platform sections were delivered to the country in August-September of the year.
Lagging in platform fabrication project terms could also led to the project cost growth. It is linked with bad project management. Lagging in implementation also leads to cost rise.
Development contract of field "Shah Deniz" was signed on June 4, 1996 in Baku and was ratified by Milli Mejilis on October 17 of the same year. The participants of project are BP (operator - 25,5%), Statoil (25,5%), SOCAR (10%), LUKAgip (10%), NICO (10%), TotalFinaElf (10%), and TPAO (9%).
"Stage - 1" of field development "Shah Deniz" provides production of 178 bn. cube meters of gas and 34 mln. tons of condensate. Besides "Stage - 1" includes the construction of the South-Caucasian gas pipeline by extent of 690 km (442 km in the territory of Azerbaijan and 248 km in the territory of Georgia).
Today, the agreements by gas supplies within the bounds of "Stage - 1" with Turkey are made on 6,3 bn cubic metre per one year, with Azerbaijan (up to 1,5 bn. cubic metre per one year) and Georgia (up to 0,8 bn. cubic metre per one year). Field's reserves "Shah Deniz" are estimated in 625 bn. cubic metre of gas and 101 mln. tons of condensate.