SOCAR may need project finance to fund Southern Gas Corridor and Shah Deniz II

Southern Gas Corridor

SOCAR may need project finance to fund Southern Gas Corridor: In an interview published in the Financial Times  last week, SOCAR Vice President Elshad Nassirov sought to allay Western Europe’s  concerns over the long-term reliability of its Caspian Sea fields as a source of the continent’s  natural gas supplies. Amid fears that the development of the Shah Deniz II field and the $45bn Southern Gas Corridor pipeline might be detrimentally affected by the recent dramatic plunge in oil prices, Nassirov insisted that there was no question of either initiative being scrapped.
“Of course, we will be affected [by the fall in oil prices], but not to the extent that we will cancel or postpone our big projects,”  he said, although he conceded that Baku was having a rethink about how to fund them. “We are changing our views, first of all because there is a new need for money with the falling prices for crude oil….and we will be trying to attract money from project finance.” With an annual capacity of 10bn m³, Shah Deniz II  is relatively modest, but  Baku hopes that the construction of a pipeline to Europe will stimulate a cluster of smaller fields, such as Absheron, Umid-Babek, and ACG deep, which together could double Azerbaijan’s  overall capacity. In the longer term, the pipeline could also become a conduit for Iranian or Turkmen gas, making Azerbaijan a key part of Europe’s strategy to diversify its energy supplies away from Russia.