A consortium between the State Oil Company of the Azerbaijan Republic (SOCAR) and Saipem SpA has won contracts for a $2.9-billion compression project in the BP PLC-operated Shah Deniz field on Azerbaijan’s side of the Caspian Sea, BP and Saipem said.
The compression project will access low-pressure gas and enable the production of an additional 50 billion cubic meters (1.77 trillion cubic feet) of natural gas and 25 million barrels of condensate, according to BP.
Italy’s Saipem and SOCAR affiliates BOS Shelf International FZCO and BOS Shelf LLC jointly won three contracts totaling $700 million, with a $600 million share for Saipem, Saipem said in a press release Wednesday.
“Saipem’s scope of work encompasses the transportation and installation of a new 19,000-ton compression platform in the Azerbaijan sector of the Caspian Sea, as well as the engineering, procurement, construction and installation of approximately 26 kilometers of offshore pipelines to connect the new compression platform to the existing facilities, and all major permanent subsea works”, Saipem said.
It expects to start work in the third quarter of 2026, to be completed 2029.
Saipem will deploy the Khankendi subsea construction vessel, owned by the Shah Deniz co-venturers, and the pipelay barge Israfil Huseynov, owned by state-owned Azerbaijan Caspian Shipping CJSC.
“The use of local naval assets and the integration with Azerbaijani partners confirm the commitment to the enhancement of skills and technologies of the country and the contribution to local content”, Saipem said.
The contracts will be executed under last year’s “framework agreement” between the Saipem-SOCAR consortium and BP that lays out the terms for Khankendi’s deployment to the Shah Deniz and Azeri-Chirag-Gunashli fields in Azerbaijani waters in the Caspian. The agreement for the vessel lasts three years with a two-year extension option, as announced by Saipem July 12, 2024.
All onshore construction activities under the contracts will be executed at BOS Shelf-operated Baku Deep Water Jacket Factory, BP said separately about the compression contracts.
“The contracts will fully leverage local fabrication yards and infrastructure, engaging the local workforce. This once again demonstrates that Azerbaijan possesses world-class onshore fabrication and offshore installation capabilities that fully meet international standards”, said Matt Kirkham, BP vice president for projects in Azerbaijan, Georgia, Turkiye, West Asia and Africa. “Just one example – between 2026 and 2028, a total of 3,040 tonnes of subsea structures will be fabricated and installed as part of the SDC project”.
According to BP, Shah Deniz began production 2006 through the Alpha platform, while Bravo began production 2018.
BP expects compression involving gas from Alpha and Bravo to start 2029 and 2030 respectively.
The Shah Deniz license area spans 858 square kilometers (331.28 square miles) in waters 50-500 meters (164.04-1,640.42 feet) deep, according to BP. The area is about 100 kilometers (62.14 miles) southeast of Baku, according to the company.
BP operates Shah Deniz with a 30 percent stake, according to the company.
To contact the author, email jov.onsat@rigzone.com
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