A consortium led by BP and the South Caucasus Pipeline Company has awarded a pipeline construction contract worth $735 million to a group of firms to help develop the Shah Deniz II gas project in Azerbaijan which offers Europe a chance to reduce reliance on Russian gas.

Shah Deniz, Azerbaijan's biggest gas field, is being developed 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 an annual production capacity of about 10 billion cubic metres (bcm) of natural gas.

The next phase, Shah Deniz II, is important for Europe in terms of providing an alternative gas supply to Russia's Gazprom. It is expected to produce 16 bcm per year from around 2019, with 10 bcm earmarked for Europe and 6 bcm for Turkey.

The latest Shah Deniz II contract was awarded to a consortium consisting of Azeri firm Azfen and Amsterdam-based Saipem Contracting Netherlands B.V.

"We are pleased that both Shah Deniz phase 2 and SCPX (South Caucasus Pipeline Expansion) projects are moving ahead across all areas," Gordon Birrell, BP's president for the Azerbaijan-Georgia-Turkey region said.

The contract is for the construction of a 428 km pipeline loop and associated above ground installations, including block valves, a pigging facility and tie-ins in Azerbaijan and Georgia, as well as the construction of a 59 km second pipeline loop and associated above ground installations in Georgia.

Work is scheduled to start in January 2015 with mechanical completion of the Georgian section expected by the end of 2016 and the section in Azerbaijan by the end of 2017.

The BP-led partners previously signed 14 contracts under the Shah Deniz II project with most of work being already commenced at the construction sites in the capital Baku.

Bakudaily.az