A gas and condensate field of world level, Shah-Deniz is located approximately 100 km to the south of Baku, Azerbaijan, on the Caspian Sea shelf at a depth of 600 m. The field contract area is 860 sq. km, and overall recoverable reserves for Shah-Deniz reach 625 billion cubic m of gas and more than 100 million tons of condensate.

The agreement on prospecting, developing and share division of production for this prospective area came into force with the Azerbaijan Republic law 17 of October 1996. Presently, the participants in the international consortium are BP (25.5 % as project operator); Statoil (25.5%); SOCAR (10%); LUKAgip (10%); TotalFinaElf (10%); NICO (10%), and TPAO (9%). Via the LUKAgip joint venture, LUKOIL Overseas Holding Ltd. controls 5% of the project participation.

In February 2003, the consortium participants sanctioned the start of the first stage of the project. For this period, the amount of proposed investment has totaled $3.2 billion and produced 178 billion cubic meters of gas and 34 mm tons/condensate. Turkey shall be the first recipient of gas from Shah-Deniz in the third quarter of 2006.

The Yuzhno-Kavkaz gas pipeline Baku-Tbilisi-Erzerum, 1050 km in length, shall supply gas from the Shah-Deniz field to consumers in Azerbaijan, Georgia, Turkey, and a number of other countries. The gas pipeline’s initial capacity is planned to exceed just over 7 billion cubic meters/year, and in the future, its output could be doubled. The cost for the construction of the pipeline is estimated at $1 billion.