Case Study - Shah Deniz 2 - Megaprojects Can Be Successful After All!


Very proud to have participated on this project as a project management consultant!


Shah Deniz (The King of the Sea) gas field is the largest natural gas field in Azerbaijan. It is situated in the South Caspian Sea, off the coast of Azerbaijan, approximately 70 kilometres (43 mi) southeast of Baku, at a depth of 600 metres (2,000 ft). The field covers approximately 860 square kilometres (330 sq mi). The Shah Deniz gas and condensate field was discovered in 1999. Stretching out over 140 square kilometres, the reservoir is similar in size and shape to Manhattan Island.

Shah Deniz 1

Stage One development of the Shah Deniz gas field started production in 2006, with a capacity of 9bcma of gas and roughly 55,000 daily barrels of condensate. The capital expenditure on Shah Deniz 1 to date is estimated to be $6bn. As of 2013, the field has produced 47.3 billion standard cubic metres (1,671 billion standard cubic feet) of gas and 99.5 million barrels of condensate.

Shah Deniz 2

Shah Deniz-2 discussions started in 2008 with the main discussion topic being the selection of transportation routes for additional gas volumes. Five-year-long intense negotiations finalized with signing of Final Investment Decision (FID) on 17 December 2013 in Baku, Azerbaijan.

Shah Deniz platform - Photo Shahin Abasaliyev - Statoil_0.jpg

Nine companies agreed to sign a gas sales agreement (GSA) with the consortium:

  • Axpo Trading AG
  • Bulgargaz EAD (Bulgaria)
  • DEPA Public Gas Corporation of Greece S.A. (Greece)
  • Enel Trade SpA (Italy)
  • E.ON Global Commodities SE (Germany)
  • Gas Natural Aprovisionamientos SDG SA (Spain)
  • GDF SUEZ S.A. (France)
  • Hera Trading srl (Italy)
  • Shell Energy Europe Limited (UK)

Out of total 10 bcm intended for Europe, 1 bcm will go to Bulgaria and Greece and the rest will go to buyers in other countries, mainly Italy.


BP operates of the field with a 28.8% share, while the other development partners include SOCAR (16.7%), Statoil (15.5%), Total (10%), Lukoil (10%), NICO (10%) and TPAO (9%).

The overall cost of Phase 2 expansion including upstream and midstream stages (TANAP and TAP pipelines) is estimated to be around $45 billion.

The Project Scope

  • Two new bridge-linked offshore platforms.
  • 26 gas production wells which will be drilled with 2 semi-submersible rigs.
  • 500 km of subsea pipelines will link the wells with the onshore terminal.
  • Upgrade of the offshore construction vessels
  • Expansion of the Sangachal terminal to accommodate the new gas processing and compression facilities.
  • Trans-Anatolian gas pipeline (TANAP)
  • Trans Adriatic Pipeline (TAP)


Map 1 - Shah Deniz 2 Scope


Map 2 - TAP and TANAP

Southern Corridor Map_0.jpg

Project Status Update

Over 50% of planned work has been completed within the second stage of development of the giant Shah Deniz gas and condensate field in the Caspian Sea, offshore Azerbaijan. The project is on target for production of first gas in late 2018, operator BP has said.

The work includes engineering, procurement and construction of onshore and offshore facilities as well as drilling subsea wells, BP Azerbaijan said this week.


Two semisubmersible drilling rigs–Istiglal and Heydar Aliyev–have been involved into the pre-drilling program for Shah Deniz -2. Eight subsea production wells have already been drilled and suspended in preparation for first gas and consequent production ramp up.