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Sustainability was appointed as the Lenders’ Independent Environmental and Social Consultant (IESC) by the Bank of China, acting as Intercreditor Agency for the Lender group financing Lukoil Overseas Shah Deniz (LOSD).  This project was Sustainability’s second environmental and social monitoring review for the Shah Deniz 2 Gas Expansion Project in Azerbaijan, following the initial due diligence phase.

As part of the monitoring, Sustainability evaluated social and environmental changes brought about by the Project and assessed the implementation and effectiveness of mitigation measures. The basis for evaluating the Project in terms of Lender policies included: Equator Principles III (2013); EBRD Performance Requirements, 2014; EBRD Environmental and Social Policy, 2014; Relevant EU Directives; International Finance Corporation (IFC) Sustainability Framework (2012) including the Environmental and Social Performance Standards (PSs); IFC General Environmental Health and Safety (EHS) Guidelines; ADB Safeguards Policy Statement (SPS) and other social requirements; among others.

The Project, which is currently nearing the end of construction, involves all the aspects of the upstream Stage 2 operations, including two new bridge-linked offshore platforms being constructed in shipyards in Azerbaijan; 26 gas producing wells; 500km of subsea pipelines to link the wells with the onshore terminal; upgrades to the offshore construction vessels; and expansion of the Sangachal Terminal (ST) to accommodate the new gas processing and compression facilities. The Project is on target for first gas from SD2 in 2018. Gas and condensate produced from the wells will be transported to the onshore ST where it will be treated to commercial quality. Treated gas will be shipped through Azerbaijan and Georgia using the Southern Caucasus Pipeline system, including the new expansion system, through Turkey using the Trans Anatolian Pipeline and through Greece and Albania and into Italy using the Trans Adriatic Pipeline.

The monitoring field visit took place in Azerbaijan in April 2017 with reporting completed by June 2017.