British oil major BP has awarded $1.5bn contract to consortium involving Saipem, BOS Shelf and Star Gulf FZCO for the second phase development of Shah Deniz gas field


The contract was awarded by BP on behalf of the Shah Deniz partnership.

Under the contract, Saipem and its partners will be responsible for installation of subsea production systems and subsea structures, laying of fiber optic cables and production umbilicals as well as laying of 90km of pipelines.

The firms will also undertake the activation, crewing and operations management of the new-build subsea construction vessel (SCV) Khankendi, the SCV diving support, remotely operated vehicle (ROV) support and marine base management post 2017.

Saipem’s share of the contract is worth $1.3bn. Though the contract is initially awarded for a duration of five year, there is possibility for extension of the period by further five years.

Saipem CEO Stefano Cao said: "We are delighted to have secured this major award, which enables us to continue and consolidate our 20-year relationship with BP and Socar in Azerbaijan and to put our world-class people and technologies at their disposal for the timely and efficient delivery of Shah Deniz Stage 2.

"This award also further strengthens Saipem’s key role in the construction of the Southern Gas Corridor where the company has a total of four contracts, in the upstream segment and in gas transportation infrastructure both onshore and offshore."

Located 90km offshore Azerbaijan in water depths from 75m to 550m, the Shah Deniz Stage 2 , also known as the Shah Deniz full field development (FFD), is estimated to cost $28bn.

The Shah Deniz Stage 2 is expected to add a further 16 billion cubic meters per year (bcma) of gas production to the approximately 9 bcma produced by Shah Deniz Stage 1.

BP operates of the field with a 28.8% stake, while the other partners include State Oil Company of Azerbaijan (SOCAR) with 16.7% stake, Statoil 15.5%, Total 10%, Lukoil 10%, NICO 10% and Türkiye Petrolleri Anonim Ortakligi (TPAO) 9%.

Image: The Shah Deniz platform in the Caspian Sea. Photo: courtesy of Shahin Abasaliyev/Statoil.