Publication: Monitor Volume: 2 Issue: 186

The parliament of Azerbaijan on October 4 ratified the country’s contract with an international consortium to explore and develop the Shah-Deniz gas and oil field in Azerbaijan’s sector of the Caspian Sea’s continental shelf. Ratification had been held up for several weeks by deputies of the Popular Front and other minority groups, who argued that the contract was not bringing advantages to the people of Azerbaijan. They ultimately stormed out of the October 4 parliamentary session.

Signed in June 1996 and worth $4 billion, the Shah-Deniz contract is Azerbaijan’s second-largest after a 1994-95 agreement, worth $7.5 billion, on the Azeri-Chirag-Guneshli offshore fields. The Shah-Deniz consortium is comprised of British Petroleum and Norway’s Statoil acting in tandem with a 25.5 percent stake each; Elf Aquitaine of France, Russia’s LUKoil, Iran’s Oil Industries, and Azerbaijan’s State Oil Company with 10 percent each; and Turkey’s TPAO with 9 percent. U.S. companies that initially bid for participation withdrew after Azerbaijan agreed to include Iran, which had been excluded from previous oil deals at U.S. request.

The field is estimated to contain 400 billion cubic meters of natural gas, 200 million tons of gas condensate, and 100 million tons of oil, at a depth ranging from 60 to 550 meters. Development and extraction are envisaged for a 35-year period, with production to come on stream by the year 2002. It will not only meet Azerbaijan’s gas needs but can turn the country into a significant gas exporter. Shah-Deniz is one of 24 prospective fields considered ready for drilling in Azerbaijan’s Caspian sector. (Petroleum Information Agency, Turan, UPI, October 4 and 5)