Azerbaijan: Shah Deniz Gas Field Expansion | Asian Development Bank

Azerbaijan: Shah Deniz Gas Field Expansion

Project Result / Case Study | 15 January 2018

This project involves a $500 million direct nonsovereign loan and a $500 million partial credit guarantee with a sovereign guarantee that would help the government to continue the development of one of its largest revenue-generating assets in challenging times globally for oil and gas investments.

Client

Southern Gas Corridor

ADB assistance

$500 million direct nonsovereign loan; $500 million partial credit guarantee with a sovereign guarantee

Key features

  • Stage 2 development of the Shah Deniz gas field, one of the world’s largest gas fields, began producing gas in 2006.
  • Azerbaijan’s natural gas sector will expand overall by encouraging foreign operators to develop similar gas reserves, bringing in much-needed technical knowledge, development experience, and foreign capital.
  • The increase in gas production and the opening of the European market to Azerbaijan gas exports will improve regional integration and diversify Azerbaijan’s export markets for natural gas.
  • The successful experience of foreign commercial banks in financing a large project in Azerbaijan will help increase foreign direct investment for the development of other upstream gas field development projects, as well as midstream and downstream petrochemical projects that use natural gas as feedstock.

ADB’s value addition

  • Facilitate the raising of large-scale, long-term commercial financing from international banks.
  • Improve corporate governance and transparency in the country’s oil and gas sector.
  • Help the government to continue the development of one of its largest revenue-generating assets in challenging times globally for oil and gas investments.

Date approved

7 December 2016

This case study is originally published in Asian Development Bank Private Sector Operations, a brochure describing the work of ADB's Private Sector Operations Department, its main goal, sector focus, portfolios, and case studies on projects approved in 2016.