Shah Deniz gas flows to Turkey

4 July 2007

BP and Statoil, as the operators of the Shah Deniz gas condensate development project and Azerbaijan Gas Supply Company (AGSC) respectively today announced that the first gas started to flow into BOTAS’s gas transportation system on July 3, 2007. This follows gas supply to Azerbaijan and Georgia from Shah Deniz. AGSC is responsible for administering the gas sales contracts for Shah Deniz Stage 1. The gas from Shah Deniz Stage 1 is currently sold to Azerbaijan, GOGC (Georgia), BOTAS and the BTC Company. 

The parties to the Shah Deniz Exploration, Development and Production Sharing Agreement (EDPSA) are: BP (operator – 25,5%), Statoil (25,5%), the State Oil Company of the Azerbaijan Republic (SOCAR – 10%), LUKOIL (10%), NICO (10%), Total (10%), and TPAO (9%).

AGSC is owned by Statoil (operator – 20.4%), BP (20.4%), the Ministry of Industry and Energy of the Azerbaijan Republic (20%), LUKOIL (8%), NICO (8%), SOCAR (8%), Total (8%) and TPAO (7.2%).

The gas from Shah Deniz is transported to BOTAS’s gas transportation system through The South Caucasus Pipeline (SCP), which is routed through Azerbaijan and Georgia. The pipeline has been operational since late 2006 transporting gas to Azerbaijan and Georgia from Shah Deniz Stage 1. Following its commissioning the pipeline was successfully tied-in with the Turkish pipeline system at the Georgian – Turkish border. The SCP has a dual operatorship with BP as the Technical Operator being responsible for construction and operation of the SCP facilities. Statoil, as Commercial Operator, is responsible for SCP's business development and administration. 
The investors in the South Caucasus Pipeline Company are: BP (Technical Operator – 25,5%), Statoil (Commercial Operator 25,5%), Azerbaijan SCP Ltd. (10%), LUKOIL (10%), NICO (10%), Total (10%), and TPAO (9%). The Ministry of Industry and Energy of the Azerbaijan Republic is a non-funding shareholder. 

Notes to Editors: 
Shah Deniz, operated by BP, has been producing over 300 mmscf (about 8.5 million cm) of gas per day and about 25,000 barrels of condensate per day. Production will continue to increase during the year as the remaining pre-drilled well is brought on stream. Drilling of new wells will commence from the platform later this year. 

In 2007 we plan to produce an average of around 63,000 barrels of oil equivalent per day (or 2.7 bn cubic metres of gas and 0.8 million tonnes of condensate for the entire year) from Shah Deniz. Plateau production from Stage 1 will be 8.6 billion cubic meters of gas per annum and approximately 30,000 barrels of condensate per day. 

The Shah Deniz Stage 1 project, which was sanctioned in February 2003, includes both an upstream and a midstream development. The Upstream project comprises a 15 well-slot TPG 500 type production, drilling and quarters platform which is installed in 105 m water depth; three sub-sea pipelines of 90 km each -- a 26” pipeline for gas and a 12” pipeline for condensate, and a 4” mono ethylene glycol (MEG) pipeline – from the TPG 500 to the Sangachal Terminal; and gas and condensate processing facilities in the onshore terminal. 
The Midstream project comprises a new gas export system - the South Caucasus Pipeline (SCP) - from Azerbaijan through Georgia to the Turkish border. SCP is a pipeline 690 kilometres in length (442 km in Azerbaijan and 248 km in Georgia), which has been constructed in the same corridor as the Baku-Tbilisi-Ceyhan (BTC) oil export pipeline in order to minimise the environmental and social impact. The pipeline diameter is 42”. 

For further information please contact:
Tamam Bayatly, BP Baku Press office, telephone:      994 (0) 12 599 4557
and Sverre Olden Mala at Statoil, tel.: (994 50)215 38 87; fax: (994 12) 4977 944