BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

BP, together with its partners, has entered into a series of agreements that will build and expand on its major oil and gas interests in Azerbaijan, paving the way for growth and additional production while deepening its partnership with the country and state oil company, SOCAR.

The agreements, signed during Baku Energy Week, include the final investment decisions for the next major phase of development of the giant Shah Deniz gas field – Shah Deniz Compression – as well as for two projects – for terminal electrification and solar power – that together are expected to enable operational emissions reduction.

They also include agreements BP to access to two new exploration and development licenses and introduce a new partner to accelerate exploration on a third.

Shah Deniz Compression Project

The next phase of development of the Shah Deniz gas field, the $2.9 billion Shah Deniz Compression project, is operated by bp with a 29.999% participating interest.

It is the third phase of development of the giant gas field, designed to access and produce low pressure gas resources from the field, increasing resource recovery and extending production life.

The project, which will include installation of a new unmanned compression platform, is expected to allow production of an additional gross 50 billion cubic metres of gas and 25 million barrels of condensate.

Aside from BP, the partners in the project include LUKOIL (19.99%), TPAO (19.00%), SGC (16.02%), NICO (10.00%) and MVM (5.00%).

Construction activities are planned to begin 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.

Shafag Solar and Sangachal Electrification Projects

BP and partners have also given the go-ahead for development of the linked Shafag solar and Sangachal terminal electrification projects.

Renewable electricity generated by the new 240MW Shafag solar project in Azerbaijan’s Jabrayil district will be supplied to grid operator AzerEnerji, that will in turn provide equivalent power to the Sangachal oil and gas terminal, operated by BP, near Baku.

This will support 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.

Development of the Sangachal terminal electrification (STEL) project was approved by investors in the terminal, including BP, SOCAR, TPAO, LUKOIL, SGC, NICO, MOL, INPEX, ExxonMobil, ITOCHU, ONGC Videsh, Eni, MVM, TotalEnergies.

The project will be developed and managed by BP as operator of the terminal. Construction is planned to begin in 2025, with completion expected in two stages – Stage 1 in mid-2027, and Stage 2 by the end of 2028.

The Shafag solar project partners include BP with 50.01%, SOCAR Green with 39.99%, and ABDF with 10% stakes.

Construction is expected to begin this year and complete in mid-2027.

New Exploration Access and Progress in Caspian Sea

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

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

“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,” said Gordon Birrell, bp executive vice president for production and operations.

Related Stories