Statoil ASA has together with partners in the Shah Deniz consortium in Azerbaijan today made a final investment decision for the stage 2 development of the Shah Deniz gas field in the Caspian Sea offshore Azerbaijan.

Statoil also enters an agreement to divest a 10% share of its 25.5% holdings in Shah Deniz and the South Caucasus Pipeline.

The BP-operated Shah Deniz consortium today announces the final investment decision for the stage 2 development of the Shah Deniz gas field in the Caspian Sea offshore Azerbaijan. This decision triggers plans to expand the South Caucasus Pipeline (SCPX) through Azerbaijan and Georgia, to construct the Trans Anatolian Gas Pipeline (TANAP) across Turkey and to construct the Trans Adriatic Pipeline (TAP) across Greece, Albania and into Italy. Together these projects will create a new Southern Gas Corridor to Europe. The total cost of the Shah Deniz stage 2 and SCP Expansion projects will be around USD 28 billion.

"The Shah Deniz stage 2 project is a significant project which will make Azerbaijan's large gas resources available for the European market. It brings benefits for customers and creates value for the partners," says Helge Lund, president and CEO of Statoil.

Statoil has today also signed an agreement to divest a 10% share of its 25.5% holdings in the Shah Deniz and the South Caucasus Pipeline. The buyers are SOCAR (6.7%) and BP (3.3%). Statoil will as part of this transaction receive a total cash consideration of USD 1.45 billion. The effective date of the transaction is 1 January 2014.

"The divestment corresponds with our strategy of portfolio optimisation based on rigid prioritisation of future investment, and capturing value created from a significant gas position," Lund says.

Statoil will not participate as an investor in TANAP.

"We have considered our potential positions throughout the project's value chain, balancing economics and risks to identify the optimal participation," says Lund.

Statoil holds a 20% share in TAP AG, the owner of Trans Adriatic Pipeline (TAP), which is developing the pipeline for gas transport from Turkey to southern Europe.

The current Statoil equity production (gas and condensate) from Shah Deniz as per third quarter 2013 is 56,000 barrels of oil equivalent per day.

The Shah Deniz stage 2 project includes offshore drilling and completion of 26 subsea wells and construction of two bridge-linked platforms. Onshore there will be new processing and compression facilities at Sangachal. Sixteen billion cubic metres per year (bcma) of gas produced from the Shah Deniz stage 2 project will be carried some 3,500 kilometres to provide energy for millions of consumers in Georgia, Turkey, Greece, Bulgaria and Italy. First gas is targeted for late 2018, with sales to Georgia and Turkey. First deliveries to Europe will follow approximately a year later.

Statoil entered Azerbaijan in 1992 and is a partner with a 8.56% share in the oil-producing Azeri-Chiraq-Guneshli (ACG) field, the Shah Deniz gas field with a 15.5% share, and the corresponding pipelines Baku-Tbilisi-Ceyhan (BTC) and South Caucasus Pipeline (SCP).

About Shah Deniz, TANAP, TAP

The Shah Deniz co-venturers are (after acquisitions): BP, operator (28.8 per cent), SOCAR (16.7 per cent), Statoil (15.5 per cent), Total (10 per cent), Lukoil (10 per cent), NICO (10 per cent) and TPAO (9 per cent).

These percentages include the above-described purchases of equity from Statoil by BP and SOCAR, respectively, which are subject to conditions that are expected to be satisfied in 2014 for completion of the transactions.

The TANAP partners are expected to be: SOCAR, operator (68 per cent), BOTAS (20 per cent) and BP (12 per cent) following the purchase of TANAP interests by BOTAS and BP that are expected to be completed in 2014.

The TAP partners are: SOCAR (20 per cent), BP (20 per cent), Statoil (20 per cent), Fluxys (16 per cent), Total (10 per cent), E.ON (9 per cent) and Axpo (5 per cent).

About Statoil

Statoil (OSE: STL, NYSE: STO) is an international energy company with operations in 34 countries. Building on 40 years of experience from oil and gas production on the Norwegian continental shelf, we are committed to accommodating the world's energy needs in a responsible manner, applying technology and creating innovative business solutions. We are headquartered in Stavanger, Norway with approx. 23,000 employees worldwide, and are listed on the New York and Oslo stock exchanges.