Azerbaijan Seals Investment Deal to Send Gas to Europe

The consortium developing an immense Azerbaijani natural gas field in the Caspian Sea signed on Tuesday a final investment deal that paves the way for the first deliveries to Europe.

The Shah Deniz II consortium signed off on the final decision worth about $28 billion (20 billion euros) of investment that triggers the start of construction of a major new pipeline to Europe.

The move is seen as a key step toward European ambitions of reducing its energy dependence on Russia.

"Today's agreement will change the energy map of Europe," Azerbaijani President Ilham Aliyev said at the signing ceremony in Baku.

"Azerbaijani gas can now reach the market that needs it the most."

In June the Shah Deniz group -- which comprises Britain's BP, Azerbaijan's SOCAR, Norway's Statoil and France's Total -- opted to build the shorter and cheaper Trans-Adriatic Pipeline (TAP) that will link up to southern Italy.

"Shah Deniz II and the Southern Corridor pipelines will not only change the energy map, but will give customers in Europe direct access to the gas resources of Azerbaijan for the first time," said BP chief executive Bob Dudley.

That decision appears to deliver the final nail in the coffin of a long-favoured rival project called Nabucco, which would have swung north to Austria to plug into a pipeline network that serves several northern European countries.

The consortium developing the Azeri field aims to extract 16 billion cubic metres (560 billion cubic feet) of gas per year from under the Caspian Sea.

Six billion cubic metres will go to Turkey and Georgia from 2018 and the rest will go to Europe from around 2019, the consortium says.

In September the group sealed delivery deals with nine firms across Europe.

The whole project will help reduce Europe's dependence on gas from Russia -- a stated EU target.

EU countries currently import 60 percent of their gas needs, with more than a quarter of that amount supplied by Russia.