The FINANCIAL — The European Bank for Reconstruction and Development (EBRD) is continuing to invest in projects that will strengthen the security of energy supply in its region of operations, according to EBRD.
The EBRD is extending a senior loan of US$ 200 million to LUKOIL Overseas Shah Deniz Ltd, a wholly-owned subsidiary of LUKOIL Overseas, the operator of LUKOIL's overseas upstream projects.
The proceeds of the loan will be used to further develop Stage 1 of the offshore Shah Deniz gas and condensate field in Azerbaijan.
The EBRD has played a crucial role in the initial development of Shah Deniz Stage 1, providing LUKOIL with loans of US$ 180 million, and SOCAR – the state oil company of Azerbaijan – with US$ 170 million. The EBRD also ensured the application of high international standards – technical, environmental and health and safety, according to EBRD.
The current loan will pay for part of a technological upgrade of existing operations, which could see output from the field increase by up to 2 billion cubic metres per annum (bcma). This increase will see peak production from the gas field reach 8.9 bcma. For comparison, Azerbaijan itself consumes 13 bcma of gas.
The Shah Deniz consortium comprises BP (as operator), Statoil, LUKOIL, SOCAR, Total, NICO and TPAO. LUKOIL owns 10 per cent of the gas field. Gas and condensate from the field are transported via the South Caucasus gas pipeline and the BTC oil pipeline respectively, to Turkey through Georgia.
Since 2006, the EBRD has invested close to €9 billion (about US$ 12.5 billion) in energy and natural resources projects throughout the region in which it works. The Bank’s priorities in the sector are energy efficiency, environmental and social sustainability and security of supply, according to EBRD.
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