Azerbaijan realized 46% of its financing obligations for Southern Gas Corridor

Baku. 25 August. REPORT.AZ/ Azerbaijan has fully committed to invest in SGC, including SD2, and was continuing to meet its financial obligations on time. Report informs citing the Natural Gas Europe website, Southern Gas Corridor Co CEO Afgan Isaev said.

Southern Gas Corridor Co had invested $5.212bn, while in total, Azerbaijan’s share in financing SGC and SD2 is estimated at $11.454bn. “Therefore, Azerbaijan has already realized 45.5% of its financing obligations.” Isaev explained the sources of funds which Azerbaijan has allocated are Issue of bonds by SGC to the sovereign wealth fund Sofaz, for a total amount of $2.5bn, and equity injections from the finance ministry and state oil concern Socar for a total amount of $1.7bn. Also inaugural eurobond in the amount of 1bn in March 2016.

Isaev added Azerbaijan is negotiating with World Bank to attract credits for SGC. “Our projects are attractive and financial entities are interested in Azerbaijan’s energy projects. It is hard to say any concrete figure which would be allocated by international finance sources, because both they and Azerbaijan should reach a common point in credit terms. However, we believe that the terms of credits must be soft and the payments period should be at least 10 years, because these projects are not only in favour of Azerbaijan, but a big region would benefit economically from these projects.”

He said that Azerbaijan is expected to allocate $2.809bn in 2016, of which 55.7%, or $1.566bn would be spent on Tanap. About 30.2%, or $847mn, would be allocated to SD2, while for TAP will take about $278mn and SCPX will take $118mn.

He added that the capex of these projects for Azerbaijan rose by $1.474bn year-on-year, while the figure for 2014 was only $227mn. The big rise is mainly owing to the acceleration of work on the SCPX and Tanap.

Azerbaijan’s state oil company, Socar, has 49% and the economy ministry 51% of Southern Gas Corridor Co.

The shareholders of Shah Deniz are: BP (operator; 28.8%), Turkish TPAO (19%), Malaysia's Petronas (15.5%), Socar (10%), Russian Lukoil (10%), Iranian Nico (10%) and Socar subsidiary SGC Upstream (6.7%).

Shareholders of Tanap are: Socar (58%), Botas (30%) and BP (12%), while TAP’s shareholders are: BP (20%), Socar (20%), Italy's Snam (20%), Belgian Fluxys (19%), Spanish Enagas (16%) and Swiss Axpo (formerly EGL - 5%).

The current cost of the SGC from the SD2 reservoir to landfall in southern Italy, is estimated at around $40bn, comprising $9.3bn for Tanap, $6bn for TAP and $23.8bn for developing SD2 as well as the SCPX.