Agreement on the Exploration, Development and Production Sharing for the Shah Deniz Prospective Area was signed June 4, 1996, and entered into force on October 17, 1996. Shah Deniz, located in the Azerbaijani sector of the Caspian Sea, is one of the world’s largest gas and condensate fields. It was discovered in 1999. The field’s reserves are estimated at 1 trillion m3 of gas and 243 million tons of condensate. The successful implementation of the Shah Deniz project made Azerbaijan a gas exporting country in the world.
Shah Deniz was developed in two phases. Shah Deniz Phase 1 (SD1) includes the drilling of 11 wells, construction of platforms, Sangachal Terminal and the 692 km South Caucasus Pipeline (SCP) to Türkiye. The gas produced in Shah Deniz is transported via underwater pipelines to Sangachal terminal, 55 km south of Baku in the Caspian coast. A part of the gas is delivered from Sangachal terminal to SOCAR’s relevant pipeline connected to the Azerbaijan’s national gas grid and another part is exported via SCP.
First gas sales began in 2006. After the commissioning of Baku-Tbilisi-Erzurum pipeline in 2007, Azerbaijan began gas exports to Georgia and Türkiye.
The full development of Shah Deniz or Shah Deniz Phase 2 (SD2) is one of the largest and most complex gas projects in the world and the first underwater infrastructure in the Caspian Sea. SD2 added 16 bcm of gas and 105,000 barrels of condensate to SD1’s annual capacity of 11 bcm of gas and 60,000 barrels of condensate respectively.
On September 19, 2013, the Shah Deniz consortium signed sale contracts with 9 European companies, on December 17, 2013, they signed the Final Investment Decision. The first commercial gas was exported to Türkiye on June 30, 2018, and to Europe on December 31, 2020.