As part of the Baku Energy Week, the final investment documents for the 240 MW Shafag Solar Power Plant (SPP) and Sangachal Terminal Electrification (STEL) projects were signed with the participation of Azerbaijani Energy Minister Parviz Shahbazov and bpExecutive Vice President for Production and Operations Gordon Birrell.
The final investment decision for the Shafag SPP project was approved by the shareholders of Shafag (Jabrail) Solar Limited - bp (50.01%), SOCAR Green (39.99%) and the Azerbaijan Business Development Fund (10%), while the final investment decision for the STEL project was approved by the investors of the Sangachal terminal - bp, SOCAR, TPAO, Lukoil, SGC, NICO, MOL, INPEX, ExxonMobil, ITOCHU, ONGC Videsh, Eni, MVM and TotalEnergies.
The documents envisage the connection of the Sangachal terminal to the electricity grid through new facilities to be built both within and outside the terminal, including a new 220 kV electrical substation. Using the virtual power transmission model, the electricity generated at the Shafag SPP will be transmitted to Azerenergy OJSC in Jabrayil, and an equivalent amount of electricity will be transmitted by Azerenergy OJSC to the Sangachal terminal in Baku. This will allow for an approximately 50% reduction in emissions from terminal operations during the future operation of the Sangachal terminal.
The terminal currently uses 7 gas turbines for electricity generation, which will be phased out after electrification and unused fuel gas volumes will be directed for export. This project will not only support the electrification of the terminal but also increase its safety.
A number of contracts have also been signed in relation to both projects to support investment decisions.
Energy Purchase and Sale Agreement and Transmission Network Connection Agreement were signed between Shafag (Jabrayil) Solar Limited and Azerenergy OJSC on the Shafag SPP project.
For the STEL project, the agreements include a package of engineering, procurement and construction contracts, an energy supply agreement and an operations and maintenance agreement between Azerenergy and bp as the Sangachal terminal operator.
In addition, two agreements were signed to support both the Shafag and STEL projects - a balancing agreement between SJSL, Azerenergy and bp as the operator of the Sangachal terminal and a power purchase agreement between Azerenergy and bp as the operator of the Sangachal terminal.
Minister of Energy Parviz Shahbazov said: “Within the framework of President Ilham Aliyev’s policy of promoting the use of green energy, the completion of this important phase by both the Shafag and Sangachal terminal electrification projects opens a new chapter in our country’s strategic energy partnership with bp.The projects that encompass such key elements as the construction of a 240MW solar plant in the Green Energy Zone and the electrification of the Sangachal terminal, one of the world's largest oil and gas terminals, exemplify our joint, innovative approach to energy security and emissions reduction. As the largest investor in Azerbaijan's oil and gas sector, bp's increased efforts to invest in renewables further strengthen the long-term strategic foundation of our partnership. Together with bp, we are not only ensuring a reliable energy supply but also laying the foundation for a sustainable, low-carbon future."
“It has become a tradition in Azerbaijan’s energy sector, embraced by President Ilham Aliyev’s personal dedication and unwavering support, to frequently witness new milestones. The Shafag solar power plant and the Sangachal terminal electrification project, implemented in partnership with the world-renowned company bp, are the latest examples of these milestones. Along with significantly contributing to energy security and efficiency, they also serve to embrace green energy. At the same time, they open up new cooperation horizons for Azerbaijan, which has already achieved energy security in the region. In addition to contributing to energy production and transmission, the projects will strongly support efforts to reduce carbon emissions," Baba Rzayev, Chairman of the Board of Azerenergy OJSC said.
Gordon Birrell, bp’s executive vice president, production and operations said: “Today’s decisions mark a new stage in both our cooperation with Azerbaijan and our regional business. The Shafag project starts a new dimension of our successful energy collaboration as it marks our first investment in the development of solar energy in the country. We are excited by the new innovative approach that links these two projects. It will enable us to reduce the operational emissions from the biggest facility we operate in Azerbaijan. We welcome this new development in our long-standing partnership with Azerbaijan, which is focused on oil and gas, and are confident that it can help to pave the way for further sustainable energy developments in the region.”
Construction activities for around 200 million USD Shafag Solar Power Plant are expected to commence this year and continue through mid-2027, utilizing primarily local resources. It is expected that, at peak, construction activities will create up to 400 jobs. The Shafag project will be developed and managed by Lightsource bp, a company fully owned by bp.
The 230 million USD - STEL project will be developed and managed by bp as operator of the Sangachal terminal. Construction activities for STEL are planned to commence this year with completion expected in two stages – Stage 1 in mid-2027, and Stage 2 by the end of 2028.
