Azerbaijan to supply gas to Europe after BP-led consortium's deal A BP-led consortium has signed a multibillion-dollar deal to bring natural gas from a huge field in the Caspian to the heart of Europe, in a move that should help the continent to reduce its heavy reliance on Russian gas. The group said they had taken a final investment decision on the second stage of the Shah Deniz gasfield, offshore Azerbaijan. The decision paves the way for the construction of pipelines that will ship the gas 3,500km across Turkey, Greece and Albania into Italy. The signing marks the fulfilment of a long-held dream of Brussels policy makers, who have pushed for years for a southern energy corridor to bring gas into Europe from the Caspian, bypassing Russia. William Hague, UK foreign secretary, who was in the Azeri capital Baku to witness the signing, said it "adds to Europe's energy security and competitiveness by opening up a new source of gas for southern Europe." But some analysts have questioned how much difference the project will make. Shah Deniz 2 will provide Europe with 10bn cubic metres a year of gas - a small fraction of total European demand. Privately, managers of Gazprom, the Russian state gas company that provides about a quarter of Europe's gas, said the Azeri exports were "just about enough for a barbecue." The pricetag for the project is also huge. The cost of developing Shah Deniz 2 and expanding export infrastructure in Azerbaijan and Georgia will come to $28bn. Adding the cost of the pipelines bringing the gas to Europe - one through Turkey, known as Tanap, and the other into Italy, called TAP - will bump up the price to more than $40bn. The plan is to ship some 16 billion cubic metres of gas a year (bcm/y) from Shah Deniz 2, with some of that going into the Turkish market and the rest into Europe. First gas is to start flowing into Turkey in late 2018, and into Europe about a year later. Rovnag Abdullayev, head of the Azeri national oil company Socar, said the project "establishes Azerbaijan as an important energy supplier to Europe, fulfilling a vision we have had for so many years." Bob Dudley, chief executive of BP, which is the operator of Shah Deniz 2, said the project "will give customers in Europe direct access to the gas resources of Azerbaijan for the first time." Mr Dudley said gas production from Shah Deniz would immediately be expanded by 1.4 bcm/y. The partners also agreed terms for extending the production-sharing agreement for the field to 2048. The BP consortium has already signed up gas sales contracts with nine European companies, which come into effect. Some 10 billion cubic metres a year of gas will be delivered over 25 years to customers in Italy, Greece and Bulgaria, while 6 bcm/y will be consumed in Turkey. Under another deal signed on Thursday, Norway's Statoil reduced its stake in the Shah Deniz consortium by 10 per cent from 25.5 per cent, selling 6.7 per cent to Socar and 3.3 per cent to BP. That leaves BP with a 28.8 per cent in the project, Socar with 16.7 per cent and Statoil with 15.5 per cent. The other partners are Total of France, Lukoil of Russia, Nico of Iran and Turkey's TPAO. Statoil's Knut Rostad said the company thought 15.5 per cent was the "right exposure." The decision to reduce the stake had come as part of a process of "prioritising the portfolio," which had begun in 2011. "We believe this is the right strategic fit for us," he said.