South Caucasus Gas Pipeline

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South Caucasus Gas Pipeline (SCP), also called the Deniz Field—Shakh Erzurum Pipeline, the Baku–Tbilisi–Erzurum Pipeline, the BTE Pipeline, or the Shah—Deniz Pipeline, is an operating natural gas pipeline.

Location

The pipeline runs from Baku, Azerbaijan through Tbilisi, Georgia to the Georgia/Turkey border, connecting with the Trans-Anatolian Gas Pipeline.

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Project Details

• Operator: SOCAR Midstream Operations LLC
  • Originally BP; Statoil
• Owner: South Caucasus Pipeline Company Ltd [100%]
• Parent company: BP [29.99%]; Southern Gas Corridor CJSC [21.02%]; Lukoil [19.99%]; TPAO [19%]; NOIC (National Iranian Oil Company, via its subsidiary Naftiran Trading Company Ltd, or NICO) [10%]
  • Originally BP [28.83%]; TPAO [19%]; Petronas [15.5%]; SOCAR [10%]; Lukoil [10%]; NIOC (via Naftiran Intertrade Company Ltd, or NICO) [10%]; SGC [6.67%]
• Capacity: 7.41 bcm/y (before the expansion), 24.04 bcm/y (after the expansion)
• Length: 692 km
• Diameter: 42 in
• Status: Operating
• Start year: 2006
• Cost: US$ 60 million (EBRD), 70 million (LUKoil Midstream),
• Financing: limited recourse financing extended by EBRD and various commercial banks to SPVs owned by SOCAR and LUKoil to finance their equity in SCP,
• Associated infrastructure: Trans-Adriatic Gas Pipeline, Trans-Anatolian Gas Pipeline

South Caucasus Pipeline Expansion (SCPx)

• Operator: SOCAR Midstream Operations LLC
  • Originally BP; Statoil
• Owner: South Caucasus Pipeline Company Ltd [100%]
• Parent company:BP [29.99%]; Southern Gas Corridor CJSC [21.02%]; Lukoil [19.99%]; TPAO [19%]; NOIC (National Iranian Oil Company, via its subsidiary Naftiran Trading Company Ltd, or NICO) [10%]
  • Originally BP [28.83%]; TPAO [19%]; Petronas [15.5%]; SOCAR [10%]; Lukoil [10%]; NIOC (via Naftiran Intertrade Company Ltd, or NICO) [10%]; SGC [6.67%]
• Capacity: 16.63 bcm/y
• Length: 489 km
• Diameter: 48 in
• Status: Operating
• Start year: 2018
• Cost: US$ 4.7 billion
• Financing:
• Associated infrastructure: Trans-Adriatic Gas Pipeline, Trans-Anatolian Gas Pipeline

South Caucasus Pipeline Future Expansion (SCPFx)

• Operator: SOCAR Midstream Operations LLC
  • Originally BP; Statoil
• Owner: South Caucasus Pipeline Company Ltd [100%]
• Parent company: BP [29.99%]; Southern Gas Corridor CJSC [21.02%]; Lukoil [19.99%]; TPAO [19%]; NOIC (National Iranian Oil Company, via its subsidiary Naftiran Trading Company Ltd, or NICO) [10%]
  • Originally BP [28.83%]; TPAO [19%]; Petronas [15.5%]; SOCAR [10%]; Lukoil [10%]; NIOC (via Naftiran Intertrade Company Ltd, or NICO) [10%]; SGC [6.67%]
• Capacity: 5 bcm/year
• Length: 93 km
• Diameter: 48 in
• Status: Shelved (2023)
  • previously Proposed
• Start year:
• Cost:
• Financing:
• Associated infrastructure: Trans-Adriatic Gas Pipeline, Trans-Anatolian Gas Pipeline

Background

The South Caucasus Pipeline (also known as Baku–Tbilisi–Erzurum Pipeline, BTE pipeline, or Shah Deniz Pipeline) is a natural gas pipeline from the Shah Deniz gas field in the Azerbaijan sector of the Caspian Sea to Turkey. Deliveries from the Shah Deniz gas through the pipeline began on 15 December 2006. On 12 August 2008, the pipeline's operator BP closed it for safety reasons because of the 2008 South Ossetia War. Gas supplies were resumed on 14 August 2008.

The initial capacity of the pipeline was 7.41 billion bcm/year. For the second stage of the Shah Deniz development, the capacity was increased to 24.04 bcm/year by adding a looping pipeline to existing SCP in Azerbaijan and Georgia, three Compressor Stations (one in Azerbaijan, two in Georgia), six Block Valve Stations (5 in Azerbaijan, 1 in Georgia) at a cost of US$3 billion. Annual transmission capacity can be increased to 34 bcm if required.

As the pipeline has the potential to be connected to Turkmen and Kazakh producers through the planned Trans-Caspian Gas Pipeline, Azerbaijan has proposed expanding its capacity up to 60 billion cubic meters (2.1 trillion cubic feet) by building a second line.

Expansion Projects

As a part of the Shah Deniz Full Field Development (FFD), otherwise called the Shahdeniz-2 project, BP carried out an extension (SCPx) by putting three additional compressor stations in Georgia and Turkey and constructing a new 48 inch pipeline looping SCP at Azerbaijani and Georgian territories. As a result of the expansion, SCP’s throughput capacity reached approximately 24.04 bcma, which tripled the current overall transportation capacity of the system. SCP system`s total capacity may be expanded further up to 31 bcma if needed.

The South Caucasus Pipeline Future Expansion (SCPFx) project appears to have been proposed around 2020 and was included on the 2020 PCI list. However, as of early 2023 there is no evidence for further progress of the project, and it is not mentioned on the SOCAR Midstream website as in progress in any way. It is therefore presumed to be shelved.

Route

The 42-in (1,070 mm) diameter gas pipeline runs through the same corridor as the Baku-Tbilisi-Ceyhan Pipeline (oil pipeline) until Erzurum, where the Baku-Tbilisi-Ceyhan Pipeline turns south to the Mediterranean. It is 692 kilometers long, of which 442 kilometers is in Azerbaijan and 248 kilometers is in Georgia.

Economic impact

The main purpose of the pipeline is to supply Turkey and Georgia. As a transit country, Georgia has the rights to take 5% of the annual gas flow through the pipeline in lieu of a tariff and can purchase a further .5 billion cubic meters (18 billion cubic feet) of gas a year at a discounted price. In the longer term, the pipeline will supply Europe with Caspian natural gas through the planned Southern Gas Corridor pipelines, such as the Trans Adriatic Pipeline and Trans-Anatolian gas pipeline.

Operatorship

The pipeline has a dual operatorship with BP as the technical operator being responsible for construction and operation of the SCP facilities and SOCAR Midstream Operations Limited, as commercial operator, is responsible for SCP's business administration.

According to the Production Sharing Agreement, commercial operation of the SCP was transferred to from Statoil to SOCAR on 1 January 2015.