Azerbaijan: Shah Deniz Stage II Gas Field Expansion Project

Nonsovereign Project | 48330-001

The upstream project includes construction of 26 subsea wells, one offshore platform, gas and condensate subsea pipelines, expansion of the Sangachal terminal, two 900 mmscfd gas compressors, and connection to the South Caucasus Pipeline.

Project Details

  • Project Officer
    Mokroussov, Sergey
    Private Sector Operations Department
    Request for information
  • Country
    Azerbaijan
  • Sector
    • Energy
Project Name Shah Deniz Stage II Gas Field Expansion Project
Project Number 48330-001
Borrower/Company Lukoil Overseas Shah Deniz
Country Azerbaijan
Location Nation-wide
Type or Modality of Assistance
3270 Loan Ordinary capital resources USD 250.00 million Committed
73 B-Loan To be decided. USD 220.00 million Committed
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Partnerships
Private sector development
Sector / Subsector

Energy / Oil and gas transmission and distribution

Gender Equity and Mainstreaming No gender elements
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Portfolio Management Division, PSOD
Responsible ADB Officer Mokroussov, Sergey
Project Sponsor(s) OAO Lukoil
Description The upstream project includes construction of 26 subsea wells, one offshore platform, gas and condensate subsea pipelines, expansion of the Sangachal terminal, two 900 mmscfd gas compressors, and connection to the South Caucasus Pipeline.
Objectives and Scope (1) To increase the output of one of Azerbaijan''s most important economic generators, (2) to establish Azerbaijan a peer in the regional economy in contributing to the promotion of value-added industries such as downstream processing, and (3) to generate substantial employment in Azerbaijan.
Status of Operation/Construction First Gas of SD2 was achieved in June 2018. Third Gas was achieved in 2021
Linkage to Country/Regional Strategy The project is aligned with the draft Azerbaijan country partnership strategy (CPS) 2014-2018, specifically in the support of select downstream petrochemical investments. The project will help convince the international finance community on the bankability of large-scale financings in Azerbaijan.
Safeguard Categories
Environment A
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The potential environmental impacts of the project have been identified and effective measures to avoid, minimize, mitigate, and compensate for the adverse impacts are incorporated in the safeguard reports and environmental management plans. In line with ADB's SPS requirements for financing of existing facilities, an environmental and social compliance audit for the existing facilities of stage I of the project (SD I) and ongoing construction activities as part of stage II expansion of the gas field (SD II) was carried out. The audit did not find any non-compliance of ADB policies associated with the ongoing construction activities. The institutional capacity and commitment of the borrower to cause the operator to manage the project's social and environmental impacts are deemed adequate.
Involuntary Resettlement The State Oil Company of Azerbaijan Republic (SOCAR) is responsible for land acquisition in connection with the project. SOCAR has transferred all lands required for the SD II project to the operator. The audit confirmed that no resettlement issues, including access rights or temporary usage of lands, existed as a result of the SD I facilities and the site proposed for expansion of the terminal as part of SD II. The audit identified the following involuntary resettlement impacts: (i) temporary land occupation by five individuals of government lands at the pipeline land fall location (2.18 hectares) BP entered into a settlement agreement with all five individual land users, pursuant to which agreed compensation was paid; and (ii) temporary economic displacement impacts for about 9 months on 46 households (184 persons) involved in small-scale fishing activities resulting from SD II pipeline installation works in Sangachal bay, owing to enforcement of a marine exclusion zone. A small-scale fishing livelihood management plan, incorporating mitigation measures and livelihood restoration measures for these 46 fishermen, has been prepared and is being implemented. The audit, based on review of the fishing livelihood management plan and verification of the individual agreements signed with the fishermen, confirmed compliance with ADB's Safeguard Policy Statement requirements.
Indigenous Peoples The audit confirms that there are no indigenous communities in the project locations that will be impacted.
Stakeholder Communication, Participation, and Consultation A stakeholder engagement plan (SEP) has been prepared by the operator (BP) to support the Shah Deniz II project for stakeholder engagement, consultation, and communications in accordance with BP's social policy and other corporate standards. The SEP has been designed to create an open communication channel with stakeholders, and allow stakeholders to understand significant impacts of the project and help the project manager to address local expectations and incorporate feedback in the project design, overall fostering the achievement of a sound and comprehensive project. BP's community and sustainable development strategy for the project is managed by the communications and external affairs team. The audit reviewed the stakeholder engagement process adopted and proposed corrective actions to ensure compliance with ADB requirements.
Timetable for assistance design, processing and implementation
Concept Clearance -
Credit Committee Meeting 02 Jun 2015
Approval 05 Aug 2015
Last PDS Update 26 Aug 2021

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Title Document Type Document Date
Shah Deniz Stage II Gas Field Expansion Project: Environmental and Social Monitoring Report (January-December 2020) Environmental and Social Monitoring Reports Feb 2021
Shah Deniz Stage II Gas Field Expansion Project: Environmental and Social Monitoring Report (November 2018-April 2019) Environmental and Social Monitoring Reports Sep 2019
Shah Deniz Stage II Gas Field Expansion Project: Environmental and Social Monitoring Report (November 2017-April 2018) Environmental and Social Monitoring Reports Dec 2018
Shah Deniz Stage II Gas Field Expansion Project: Environmental and Social Monitoring Report (May-October 2017) Environmental and Social Monitoring Reports Oct 2017
Shah Deniz Stage II Gas Field Expansion Project: Southern Gas Corridor CJSC Environmental and Social Monitoring Report (May-October 2017) Environmental and Social Monitoring Reports Oct 2017
Shah Deniz Stage II Gas Field Expansion Project: Environmental and Social Monitoring Report (July-December 2016) Environmental and Social Monitoring Reports Jul 2017
Shah Deniz Stage II Gas Field Expansion Project: Environmental and Social Performance Report (November 2015-June 2016) Environmental and Social Monitoring Reports Aug 2016
Shah Deniz Stage II Gas Field Expansion Project / Shah Deniz Gas Field Expansion Project: Environmental and Social Compliance Audit Report Environment and Social Compliance Audit Reports Jul 2015
Shah Deniz Stage II Gas Field Expansion Project / Shah Deniz Gas Field Expansion Project: Fishing Livelihoods Management Plan Resettlement Plans Jul 2015
Shah Deniz Stage II Gas Field Expansion Project / Shah Deniz Gas Field Expansion Project: Environmental and Social Impact Assessment (July 2014) and Addendum (March 2015) Environment and Social Impact Assessments Jul 2014
AZE: Shah Deniz Stage II Gas Condensate Field Project Environment and Social Compliance Audit Reports May 2014

Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.