Baku: The shareholders of Shafag (Jabrayil) Solar Limited (SJSL), a joint venture between bp, SOCAR Green, and the Azerbaijan Business Development Fund (ABDF), have announced the final investment decision for the Shafag solar project. This decision marks the beginning of the construction of a 240MW AC solar plant in the Jabrayil district of Azerbaijan.
According to Azeri-Press News Agency, investors in the Sangachal terminal, including bp, SOCAR, TPAO, LUKOIL, SGC, NICO, MOL, INPEX, ExxonMobil, ITOCHU, ONGC Videsh, Eni, MVM, and TotalEnergies, have also sanctioned the Sangachal terminal electrification (STEL) project. The STEL project will enable the terminal to connect with the national grid operated by AzerEnerji OJSC through new facilities, including a 220/110 kV electricity substation.
The Shafag and STEL projects are interconnected through a ‘virtual power transfer arrangement.’ The Shafag plant will produce and deliver power to AzerEnerji in the Jabrayil district, while AzerEnerji will deliver an equivalent amount of electricity to the Sangachal terminal near Baku. These projects aim to reduce operational emissions by approximately 50% over the future life of the Sangachal terminal.
Currently, the Sangachal terminal operates using seven gas turbines for power generation. The electrification project will phase out these turbines, enabling the export of the saved fuel gas. Several agreements supporting both projects were signed, including a utility power purchase agreement and a transmission connection agreement for the Shafag project, and engineering, procurement, and construction contracts for the STEL project.
The official signing ceremony for the final investment decisions and agreements took place at the Baku Expo Centre during the Baku Energy Week. Parviz Shahbazov, Minister of Energy of Azerbaijan, highlighted the strategic importance of these projects, emphasizing their role in promoting green energy and enhancing the country’s partnership with bp.
Baba Rzayev, chairman of the board of AzerEnerji OJSC, remarked on the tradition of achieving new milestones in Azerbaijan’s energy sector. He noted that the projects contribute significantly to energy security, efficiency, and the adoption of green energy, while opening new cooperation opportunities for Azerbaijan.
Gordon Birrell, executive vice president of production and operations at bp, expressed excitement about the innovative approach linking the two projects, which marks bp’s first investment in solar energy development in Azerbaijan.
Construction for the Shafag solar plant, valued at around $200 million, is set to begin this year, utilizing primarily local resources and creating up to 400 jobs at its peak. The plant is expected to produce 500 million kilowatt-hours of electricity annually, saving 120-150 million cubic meters of natural gas and reducing carbon emissions by 260-330 thousand tons.
The $230 million STEL project is also slated to begin construction this year, with completion expected in two stages by the end of 2028. Both projects are supported by agreements signed between BP and AzerEnerji OJSC, underscoring their commitment to a sustainable and low-carbon energy future.