Russian oil firm Lukoil will receive $500m loan from the European Bank for Reconstruction and Development (EBRD) to fund development of Shah Deniz gas field off the coast of Azerbaijan.

The company had appointed the EBRD and the Asian Development Bank (ADB) as the mandated lead arrangers, to finance its share in the project, reported Reuters.

The EBRD earlier provided $380m in two tranches to Lukoil Overseas Shah Deniz, to fund its activity in the offshore project, which is said to be Azerbaijan’s biggest gas field.

Located 70km south-east of Baku, in water depths of 600m, the Shah Deniz field is being operated by BP with 28.8% stake.

Other partners in the project include TPAO, SOCAR, Petronas and NIOC with 19%, 16.7%, 15.5% and 10% stakes, respectively.

Commissioned in 2006, the Shah Deniz I field produces around 10 billion cubic metres (bcm) natural gas a year, and is estimated to host 1.2 trillion cubic meters of natural gas reserves.

Planned to be commissioned between 2019 and 2020, the Shah Deniz II is expected to produce 16bcm of natural gas annually.