bp Starts Offshore Work on $2.9bn Shah Deniz Compression Project

bp has completed the installation of offshore tubular piles for the Shah Deniz Compression project in Azerbaijan, marking the start of offshore construction, the company said in a statement reported by APA on 20 October 2026. In the preceding weeks, four piles were transported offshore and installed using the Khankendi subsea construction vessel. Each is about 70 metres long, 108 inches in diameter and weighs 292 tonnes, which bp said makes them the largest-diameter tubular piles it has ever installed in the Caspian Sea.

The piles will form the foundation of the platform's jacket. bp said the work paves the way for the next major milestone, installation of the jacket, which is scheduled for the first half of 2028. A specially designed 188-tonne subsea support frame kept the piles stable and vertically aligned during installation, and pile plug technology was used for the first time in bp's operations in the region.

The project is valued at $2.9bn, aims to increase the recovery of low-pressure gas reserves and is expected to enable the production of an additional 50 billion cubic metres (bcm) of gas, Trend reported. Citing bp, Trend put the production capacity of the existing Shah Deniz infrastructure at about 76.8 million standard cubic metres of gas a day, or about 28 bcm a year.

More than half of national gas output

Shah Deniz lies on the deep-water shelf of the Caspian Sea, 70 km south-east of Baku. It was discovered in 1999, with reserves initially estimated at about 1 trillion cubic metres of gas and 2 billion barrels of condensate; commercial production from the first stage began in 2006 and Shah Deniz 2 started production in 2018, according to Trend. bp is the operator with 29.99%, alongside Lukoil (19.99%), TPAO (19%), SGC (16.02%), NICO (10%) and MVM (5%). By 1 October 2026 the field had produced 285.3 bcm of gas and nearly 55 million tonnes of condensate, the Ministry of Energy said in a statement cited by Trend.

The field supplied 13.7 bcm of the 25.4 bcm of gas Azerbaijan produced in January to June 2026, according to Ministry of Energy operational data. The Azeri-Chirag-Gunashli (ACG) field contributed 7.3 bcm, SOCAR 3.6 bcm and Absheron 0.8 bcm.

Exports to Europe fall

Azerbaijan exported 18.4 bcm of gas in January to September 2026, up 0.5% on a year earlier, according to Ministry of Energy figures reported by APA. Deliveries to Europe fell 8.5% to 8.6 bcm, and exports to Türkiye fell 4.1% to 7 bcm, including 4.2 bcm through TANAP, down 2.3%. Georgia took about 1.6 bcm, roughly unchanged, and Syria 1.2 bcm. Customs data for January to August, reported by CBJ earlier this month, showed export earnings falling faster than volumes.

Why it matters

Shah Deniz produces more than half of Azerbaijan's gas at a time when total exports are flat and sales to Europe are falling, so the progress of the compression project matters to gas buyers and to the state. The fiscal outlook underlines the point. The medium-term expenditure framework prepared by the Ministry of Finance projects profit tax from the Shah Deniz production sharing agreement at 1.42 billion manats in 2027, 1 billion in 2028, 850 million in 2029 and 700 million in 2030, Trend reported, on assumptions of $65 oil and 1.7 manats to the dollar. Profit tax from ACG is projected to edge up over the same years, from 320 million to 340 million manats.

For contractors and suppliers, bp's statement fixes the next major offshore milestone, the jacket installation, in the first half of 2028. Absheron, where partners have taken a final investment decision on full-field development, is the other gas project to watch for new supply.

What to watch

• Installation of the compression platform jacket, which bp has scheduled for the first half of 2028.
• Whether gas exports to Europe recover from the 8.5% fall recorded in January to September 2026.
• Full-year production data from the Ministry of Energy, including Shah Deniz output against existing capacity of about 28 bcm a year.