World's Energy

04-24-2009 - Upstream OnLine - First gas from the second production phase of Azerbaijan's Shah Deniz development, in the Caspian Sea, will be delayed until about 2016, field partner StatoilHydro said. Kristian Hausken, president StatoilHydro Azerbaijan, told Reuters on the sidelines of a gas conference in Sofia that problems in setting transit conditions were behind the expected delay. He said: "Shah-Deniz is mature to take decisions to be developed provided we see a commercial solution. And the longer it takes to get the commercial solution and by this I mean transit, the longer it is delayed in a way. "The challenge is to get the transit conditions that can enable Shah Deniz gas to get to Europe. When that is ready then we have a project and then we can see deliveries around 2016," he told the news agency. The second phase, estimated to cost around $10 billion, has been identified as a source of gas for the Nabucco pipeline project, aimed at diversifying Europe's supplies. Turkey and Azerbaijan are in talks regarding the transit of the gas, but these have been delayed by demands from Ankara for a share of the gas that will pass through Turkish territory. StatoilHydro and BP control Shah Deniz, which produces around 15 million cubic metres of gas per day and has reserves of 1.2 trillion cubic metres. A BP source said last month that the startup of the second output phase would be in 2014 at the earliest from a previous target of 2011 to 2012. "It will not be 2011 to 2012, it will also not be 2014. It will be later, around 2016 plus or minus," Hausken said. "We are at a stage where we cannot move strongly ahead without having more security in knowing which direction and how it is going to be commercialised," he added. Azeri state energy company Socar is also a partner in Shah Deniz, along with Russia's Lukoil , France's Total and Iranian and Turkish state companies.