The Shah Deniz gas field is situated in the South Caspian Sea off the coast of Azerbaijan about 70km southeast of Baku, at a depth of 600m.

It is estimated to have reserves between 1.5 billion barrels to 3 billion barrels of oil equivalent and from 50 to 100 billion cubic meters of gas.

According to BP, the decision is said to be an important milestone in the Shah Deniz consortium’s multi-phased approach to the opening of the Southern Corridor.

Shah Deniz Stage 2 project will bring gas from the Caspian Sea to Turkey and European markets and add a further 16bcma of gas production to about 9bcma from Shah Deniz Stage 1.

BP Azerbaijan, Georgia and Turkey regional president Gordon Birrell said the company has concluded the comprehensive and competitive pipeline selection process to move ahead with the Southern Gas Corridor.

"This will bring gas from the Caspian Sea directly to Europe for the first time," Birrell added.

The consortium has agreed terms with a number of companies in Italy and Greece to sell the gas produced from the field.

In addition, the consortium is negotiating to sell gas in Bulgaria.

Initially, the Southern Corridor will supply up to 10 billion cubic metres a year natural gas to European markets.

The Shah Deniz consortium includes BP, the operator with 25.5%, Statoil with 25.5%, SOCAR Lukoil, and Total each hold 10%, while TPAO has 9% interest.