Wednesday, 23 January 2013

Caspian: Shah Deniz budget set to rise

The budget for the second phase of the Shah Deniz project is expected to climb, according to Socar president Rovnag Abdullaev at the end of December. Formerly put at $25 billion, itself an increase on the earlier budget of $16 billion, the new cost for Phase Two is estimated at between $28 billion and $30 billion.

The budget was confirmed by Shah Deniz consortium members (BP, Statoil, Total, Socar, TPAO and National Iranian Oil Company) on 9 January, although a final investment decision is not expected until the second half of the year. In the meantime an initial budget of $6 billion has been allocated for work on infrastructure and platform construction in 2013.

No reason was given for the budget increase beyond the usual inevitabilities of cost overruns. Although some members of the consortium are reportedly weary with the rising cost, there is hope that this year's FID will finally draw a line under the budget.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2013 Menas Associates

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