BP Signs Natural-Gas Sales Deals With Nine EU Companies

BP Plc (BP/) and its partners at Azerbaijan’s Shah Deniz natural-gas field agreed to sell the fuel to nine companies in Europe, helping the region reduce reliance on Russian supplies.

The developers signed 25-year accords to sell more than 10 billion cubic meters of gas a year from the field’s second phase starting in 2019, Tamam Bayatli, a BP spokeswoman, said today in Baku. Enel SpA (ENEL), EON SE and GDF Suez SA (GSZ) were among the buyers.

Utilities in the European Union are looking to Shah Deniz, estimated to contain 1.2 trillion cubic meters of gas, and other deposits in the Caspian Sea to diversify supply away from Russia, which provides a quarter of EU demand.

Shah Deniz phase two, estimated to cost $25 billion, will start producing in 2018. The fuel will travel to Turkey’s EU border via the BP-led South Caucasus Pipeline, which will connect with a second link stretching to Greece, where it will join with the planned Trans-Adriatic Pipeline, or TAP.

The gas buyers have all agreed to purchase “significant quantities,” Al Cook, vice president at London-based BP, said today, declining to give an exact breakdown of volumes.

Greece and Bulgaria will receive 1 billion cubic meters a year each, while Italian companies will buy 7 billion to 8 billion cubic meters a year, according to State Oil Co. of Azerbaijan, or Socar, a partner of BP at Shah Deniz. There’ll be enough fuel to send further into central and western parts of Europe through existing interconnectors, it said.

“The gas contracts signed today are sensitive to market demands within Europe,” Cook said. “The way we sell the gas recognizes the needs of the countries and the companies that we are selling gas to.”

The Shah Deniz partners will receive $200 billion from the gas sales, Socar President Rovnaq Abdullayev said in Baku.

The buyers also included Axpo Trading AG, Bulgargaz EAD, Depa, Gas Natural Fenosa, Hera Trading Srl and Shell Energy Europe.

To contact the reporter on this story: Zulfugar Agayev in Baku at zagayev@bloomberg.net

To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net

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