Azerbaijan awards $1.5bn offshore gas contract to Italy's Saipem

By bne IntelliNews May 4, 2016

Azerbaijan's Shah Deniz II Consortium has awarded a $1.5bn contract to Italy's Saipem and local companies Bos Shelf and Star Gulf FZCO for transport and installation of deep-water subsea production systems at the offshore gas project Shah Deniz II, reported on May 3.

With a cost estimated at $25bn, Shah Deniz II is the largest offshore gas project in Azerbaijan at the moment. Through a network of interconnected pipelines that traverses Azerbaijan, Georgia, Turkey, Greece and Albania, some 16bn cubic metres (bcm) of Azerbaijani gas will be transported to Turkey and Europe starting 2019. The offshore part of the project is overseen by a consortium led by oil major BP.

The contract scope is for 2016-2022, with the option to extend it by another five years to cover the installation of remaining trees, flying leads and jumpers at the East-South, East-North and West-South subsea flanks.

“The new flagship vessel Khankendi, which is currently under construction by Baku Shipyard, will provide essential support for the installation of the Stage 2 subsea structures - the biggest subsea production system ever built in the Caspian,” Frank Wilson, BP's vice president for Shah Deniz II, said according to “This major contract award for the installation of subsea production systems underpins our commitment to deploy new advanced subsea production technology for the first time to the Caspian as part of the Shah Deniz Stage 2 development.”

Works on Shah Deniz II and the first pipeline that takes the gas from the field to the border with Turkey are 70% complete.

Bos Shelf is a joint venture of Azerbaijani oil company Socar and the Emirati Star Gulf Fzco. It is unclear who owns the latter, as the company does not have a website. Saipem, a leading company in global drilling services, engineering, procurement, construction and installation of pipelines, has been working in Azerbaijan's section of the Caspian Sea for over a decade. The company's share of the latest contract is $1.3bn, according to energy news outlet Splash 24/7.

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