BP, SOCAR-KBR ink £50 million deals for major Azerbaijan energy projects

British energy company BP has signed two contracts with SOCAR-KBR LLC — a joint venture between the State Oil Company of the Republic of Azerbaijan (SOCAR) and the US-based firm KBR — for two new projects in Azerbaijan. The total value of the contracts is estimated at £50 million.

According to a statement from BP-Azerbaijan cited by local media, one of the contracts supports the electrification of the Sangachal Terminal (STEL), while the other concerns the Shah Deniz Compression (SDC) platform project at the Shah Deniz gas field.

The SDC-related contract, worth £43 million, came into effect on July 1, 2025. Work under this agreement is scheduled for completion in 2026. The scope of the project includes design, engineering, and procurement services for constructing the SDC platform topsides, its jacket and piles, as well as associated onshore and offshore infrastructure. This includes integration with the subsea system and relevant facilities on the Shah Deniz Alpha and Shah Deniz Bravo platforms, along with the Sangachal Terminal. The contract also encompasses preparation for installation, commissioning, and operational readiness.

The second contract, covering the Sangachal Terminal Electrification (STEL) project, is valued at £7 million and also became effective on July 1. Completion is expected by 2028. Under this agreement, SOCAR-KBR will provide engineering and procurement services to install new equipment and modify existing systems at the Sangachal Terminal. These efforts aim to ensure a protective mechanism for power transmission from the national grid and provide an uninterrupted electricity supply.

The STEL project, estimated to cost $230 million, will be implemented by BP. It involves connecting the Sangachal Terminal to the national electric grid operated by Azerenerji OJSC. To achieve this, new facilities will be constructed both within and outside the terminal area, including a new 220/110 kV substation. Construction is expected to begin this year, with the first phase completed by mid-2027 and the second by the end of 2028.

The project is projected to reduce the terminal’s operational emissions by 50%. Currently, the Sangachal Terminal uses seven gas turbines for power generation. These will be gradually decommissioned following electrification, with the freed-up gas redirected for export.

As for the Shah Deniz Compression (SDC) project, the final investment decision (FID) was signed in Baku on June 4, 2025, by the shareholders of the Shah Deniz development consortium. The $2.9 billion SDC project represents a continuation of the previous two development phases of the Shah Deniz field. It aims to unlock low-pressure gas reserves at the site, thereby maximising overall gas recovery.

Once operational, the SDC project is expected to enable the production and export of approximately 50 billion cubic meters of additional natural gas and 25 million barrels of extra condensate from the field. Construction of the new compression platform is scheduled to start in 2025, with BP planning to commission the SDC platform in 2029.

By Tamilla Hasanova