Lukoil Overseas – South Caucasus Pipeline

The South Caucasus Pipeline shares the same corridor, as well as social and environmental concerns, as the controversial BTC Pipeline

The South Caucasus Pipeline (SCP) originates about 100 km south of Baku, Azerbaijan, at one of the world’s major gas and condensate fields, Shah Deniz. The pipeline begins at the Sangachal terminal, crosses Azerbaijan and Georgia, and ends at the Turkish border at Erzerum. The 692 km pipeline uses the same corridor as the Baku-Tbilisi-Ceyhyan (BTC) Pipeline to minimize environmental and social impacts. It could also be linked to any future trans-Caspian gas pipeline.

Participants in the South Caucasus Pipeline Company include BP (25.5%), Statoil (25.5%), SOCAR (10%), Lukoil (10%), TotalFinaElf (10%), NICO (10%) and TPAO (9%). Total recoverable reserves are estimated at 625 billion cubic meters of gas and more than 100 million tons of condensate. The SCP is also known as the Yuznho-Kavkaz Pipeline, BTE (Baku-Tbilisi-Erzerum), or the Shah Deniz Pipeline. Gas production at Shah Deniz and SCP operations began in December 2006.

The European Bank for Reconstruction and Development (EBRD) has funded the project with $70 million and $60 million loans to Lukoil and SOCAR respectively. According to EBRD requirements, the Operator of the SCP Project has carried out an extensive Environmental and Social Impact Assessment (ESIA), but the project faces many of the same environmental and social problems as the BTC pipeline project.