WHAT IS SOUTHERN GAS CORRIDOR?
The Southern Gas Corridor project aims to increase and diversify European energy supply by bringing gas resources from the Caspian Sea to markets in Europe. The Southern Gas Corridor comprises the following four projects: (i) operation of Shah Deniz natural gas-condensate field (“SD1” project) and its full-field development (“SD2'” project), (ii) the operation of the South Caucasus Pipeline (“SCP” project) and its expansion (“SCPX” project), (iii) the construction of the Trans-Anatolian Natural Gas Pipeline (“TANAP” project) and (iv) the construction of the Trans Adriatic Pipeline (“TAP” project) (SD2, SCPX, TANAP and TAP collectively, the “Projects”). The Projects have an estimated investment cost of approximately US$40 billion. Upon completion, the SD2 project will add a further 16 bcm of natural gas per annum to 10.9 bcma (maximum production capacity) already produced under SD1 project. Total length of the newly constructed SCPX, TANAP and TAP pipelines will be more than 3,200 kilometres.
In order to ensure the delivery of Azerbaijani gas to the European markets, on 29 October 2013 the President of the Republic of Azerbaijan signed a decree establishing a State Commission with the purpose of ensuring state control over and providing state support in regard to the effective implementation of the full-field development of Shah Deniz gas-condensate field (“SD2”), South Caucasus Pipeline Expansion (“SCPX”), implementation of Trans-Anatolian Pipeline (“TANAP”) and Trans Adriatic Pipeline (“TAP”) projects (together “Projects”).
Subsequently, the President of the Republic of Azerbaijan signed a decree dated 25 February 2014 on the establishment of “Southern Gas Corridor” Closed Joint-Stock Company (“SGC”) with the purpose of consolidating, managing and financing the State’s interests in the Projects. SGC was founded on 31 March 2014 by the State (the Ministry of Economy of Azerbaijan Republic) (51%) and SOCAR (49%).
In accordance with the aforementioned decree, all of SOCAR’s participating interests in the Projects were transferred to SGC, which undertook onward financing of these participating interests (the completion of the transfer of 10% stakes in Shah Deniz and South Caucasus Pipeline projects will take place in 2023 subject to the fulfilment of certain conditions precedent).