August 1, 2019 / 11:33 AM / 10 months ago

Azerbaijan may not need $750 mln World Bank loan for gas project

BAKU, Aug 1 (Reuters) - Azerbaijan may no longer need a $750 million loan from the World Bank for the Southern Gas Corridor (SGC) project aimed at carrying gas from Azerbaijan to Europe, the country’s finance minister said on Thursday.

SGC’s three pipelines - the Trans-Adriatic Pipeline (TAP), the South Caucasus Pipeline through Georgia and the TANAP through Turkey - will provide the first direct route for 16 billion cubic metres (bcm) of gas from Azerbaijan’s Shah Deniz field to markets in Europe.

A loan agreement between SGC and the World Bank’s Multilateral Investment Guarantee Agency was signed last June, guaranteed by Azerbaijan’s government.

“Azerbaijan no longer needs a loan of $750 million, although negotiations with international financial institutions have already been held and an agreement has been reached on the allocation of these funds,” Samir Sharifov said.

“This became possible as a result of cost optimisation in the Southern Gas Corridor project and free cash flow after the launch of the TANAP project.”

The first commercial gas deliveries to Turkey from Shah Deniz II commenced last June. The chain of pipelines can be expanded after it becomes fully operational in 2020.

The Shah Deniz I field, which has been pumping gas since 2006, has a production capacity of 8 bcm, and output from Shah Deniz II is expected to reach 16 bcm of natural gas per year, with 10 bcm earmarked for Europe and 6 bcm for Turkey.

Total cost of the SGC project is estimated at $40 billion. (Reporting by Nailia Bagirova; writing by Margarita Antidze; editing by Jane Merriman)

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