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BP and its partners in the Shah Deniz gas field in the Caspian Sea said Tuesday they will fund Stage 2 development of the huge field.

Shah Deniz in offshore Azerbaijan is operated by BP, which holds a 25.5% share.

Other partners include Statoil (25.5%), Azerbaijan’s state-owned SOCAR (10%), Total S.A. (10%), and LUKoil (10%), NIOC (10%), and TPAO (9%).

Statoil this week agreed to sell 6.7% to SOCAR and 3.3% to BP. The deal is expected to close in 2014.

The Shah Deniz field was discovered in 1999. Azerbaijan has been exporting gas to Georgia and Turkey since 2006 from the Shah Deniz Stage 1 development.

Stage 2 includes plans to expand the South Caucasus Pipeline through Azerbaijan and Georgia, to construct the Trans Anatolian Gas Pipeline (TANAP) across Turkey, and to construct the Trans Adriatic Pipeline (TAP) across Greece, Albania and into Italy.

“Together these projects, as well as gas transmission infrastructure to Bulgaria, will create a new Southern Gas Corridor to Europe,” the partners said in a statement.

The Stage two project includes offshore drilling and completion of 26 subsea wells and construction of two bridge-linked platforms, and devleopment of onshore  processing and compression facilities at Sangachal.

The total cost of the Shah Deniz Stage 2 and South Caucasus Pipeline (SCP) expansion projects will be around $28bn.

Up to 16 billion cubic metres per year (bcma) of gas produced from the giant Shah Deniz field will be carried some 3,500 kilometres to provide energy for millions of consumers in Georgia, Turkey, Greece, Bulgaria and Italy. First gas is targeted for late 2018, with sales to Georgia and Turkey; first deliveries to Europe will follow about a year later.

Condensate production from the Shah Deniz field is expected increase to 120,000 barrels per day, from current levels of about 55,000 barrels per day.

SOCAR and the Shah Deniz partners reached terms for extending the Shah Deniz Production Sharing Agreement up to 2048, the statement said.

The signing Tuesday of the Stage 2 agreement was attended by the president of Azerbaijan, Ilham Aliyev, the prime ministers of  Albania, Bulgari,Georgia,Croatia, the president of Montenegro, and the foreign minister of the UK, William Hague.