BAKU, May 26 (Reuters) - A consortium led by BP andthe South Caucasus Pipeline Company has awarded a pipelineconstruction contract worth $735 million to a group of firms tohelp develop the Shah Deniz II gas project in Azerbaijan whichoffers Europe a chance to reduce reliance on Russian gas.
Shah Deniz, Azerbaijan's biggest gas field, is beingdeveloped by consortium partners including Britain's BP,Norway's Statoil and Azeri state energy company SOCAR.
Shah Deniz I has been pumping gas since 2006 and has anannual production capacity of about 10 billion cubic metres(bcm) of natural gas.
The next phase, Shah Deniz II, is important for Europe interms of providing an alternative gas supply to Russia's Gazprom. It is expected to produce 16 bcm per year from around2019, with 10 bcm earmarked for Europe and 6 bcm for Turkey.
The latest Shah Deniz II contract was awarded to aconsortium consisting of Azeri firm Azfen and Amsterdam-basedSaipem Contracting Netherlands B.V.
"We are pleased that both Shah Deniz phase 2 and SCPX (SouthCaucasus Pipeline Expansion) projects are moving ahead acrossall areas," Gordon Birrell, BP's president for theAzerbaijan-Georgia-Turkey region said.
The contract is for the construction of a 428 km pipelineloop and associated above ground installations, including blockvalves, a pigging facility and tie-ins in Azerbaijan andGeorgia, as well as the construction of a 59 km second pipelineloop and associated above ground installations in Georgia.
Work is scheduled to start in January 2015 with mechanicalcompletion of the Georgian section expected by the end of 2016and the section in Azerbaijan by the end of 2017.
The BP-led partners previously signed 14 contracts under theShah Deniz II project with most of work being already commencedat the construction sites in the capital Baku. (Reporting by Nailia Bagirova; Writing by Margarita Antidze;Editing by David Evans)