BP green-lights batch of energy projects: Next chapter of mega gas field is a go

UK-headquartered energy giant BP has revealed final investment decisions for multiple projects, including the next phase of development for a giant natural gas field in the Caspian Sea, described as one of the world’s largest gas-condensate fields and the company’s largest gas discovery.

Thanks to a series of agreements that will expand its oil and gas interests in Azerbaijan, the UK player expects to unlock growth and additional production while deepening its partnership with the country and its oil company, SOCAR.

These deals entail the final investment decisions for the next major phase of development of the Shah Deniz gas field, known as Shah Deniz Compression, alongside two projects that cover terminal electrification and solar power to enable operational emissions reduction.

Gordon Birrell, BP’s EVP Production & Operations, commented: “The next phase of development for Shah Deniz – a truly world-class gas field – will access additional resources, extend production and support continued delivery of important gas supplies to European customers.

“Innovative linked electrification and solar projects will support lower operational emissions in Azerbaijan while freeing up fuel gas for export. And we look forward to working with SOCAR and TPAO to progress exploration for further opportunities.”

The $2.9 billion Shah Deniz Compression, which is one of the UK firm’s eight to ten major projects expected to start up between 2028 and 2030, is expected to contribute to growing the company’s global upstream production to 2.3-2.5 mmboed by 2030, with the capacity to increase further to 2035.  

This is the field’s third phase of development, which is designed to access and produce low-pressure gas resources from the asset, increasing resource recovery and extending production life. The first gas from the project is expected in 2029.

Encapsulating the installation of a new unmanned compression platform, the project is expected to allow production of an additional gross of 50 billion cubic meters of gas and 25 million barrels of condensate. The Shah Deniz Compression project’s partners are BP (operator with 29.99%), Lukoil (19.99%), TPAO (19.00%), SGC (16.02%), NICO (10.00%), and MVM (5.00%).

The construction activities are planned to start later this year, with completion expected in 2029, enabling first gas for compression from the Shah Deniz A platform in 2029 and from the Shah Deniz B platform in 2030. 

Thanks to the go-ahead for the development of the linked Shafag solar and Sangachal terminal electrification projects, renewable electricity generated by the new 240 MW Shafag solar project in Azerbaijan’s Jabrayil district will be supplied to grid operator AzerEnerji, which will in turn provide equivalent power to the Sangachal oil and gas terminal near Baku.

These projects are envisioned to support the reduction of operational emissions in Azerbaijan, enabled by the electrification of the terminal, which will also free for export the gas currently used to fuel the turbines generating power for the terminal.

The development of the Sangachal terminal electrification (STEL) project was approved by BP, SOCAR, TPAO, Lukoil, SGC, NICO, MOL, INPEX, ExxonMobil, ITOCHU, ONGC Videsh, Eni, MVM, and TotalEnergies. The construction is planned to begin this year with completion expected in two stages: Stage 1 in mid-2027 and Stage 2 by the end of 2028.

The players that will hold Shafag solar project’s ownership interests are BP (50.01%), SOCAR Green (39.99%), and ABDF (10%). The construction is anticipated to kick off this year and end in mid-2027.

BP also secured access to two new exploration and development licenses and the all-clear to introduce a new partner to accelerate exploration on a third. The agreements align with the firm’s strategy to grow long-term shareholder value, contributing to its goal of growing its upstream business, as well as underlining its continuing commitment to Azerbaijan.

Therefore, BP has completed an agreement with SOCAR to access two blocks in the Caspian Sea for exploration and development of the discovered Karabagh oil field and the Ashrafi-Dan Ulduzu-Aypara (ADUA) area. The company will have 35% working interest and become the operator of each block, with SOCAR retaining 65%.

Separately, the duo reached an agreement with Türkiye’s TPAO to take a 30% interest in the production sharing agreement for the Shafag-Asiman block in the Caspian Sea to accelerate evaluation of development opportunities for the block, on which a first well, drilled in 2021, encountered gas condensate resources. 

Over the past 33 years in Azerbaijan, BP led the development of the Azeri-Chirag-Deepwater Gunashli (ACG) oil field, the Shah Deniz gas field, and the Sangachal processing and export terminal, all three of which it also operates.

The company also spearheaded the development of the associated export pipelines, the Baku-Tblisi-Ceyhan (BTC) oil pipeline and the Southern Gas Corridor (SGC) gas pipeline network.

“As can be seen by the agreements we signed this week, we continue to see many opportunities for further development and growth. As we deliver our strategy of growing our upstream, we will build on our strong positions in regions like Azerbaijan, and on the deep relationships we have with the government and our partners,” Birrell added.