Manila, - The Asian Development Bank (ADB) will provide US$1 billion in private and public sector assistance to expand Azerbaijan's Shah Deniz II, one of the world's largest gas fields.

The assistance comprises a $500 million private sector loan to the Southern Gas Corridor Closed Joint Stock Company (SGC) and a $500 million sovereign-counter guaranteed partial credit guarantee, ADB press release said today.

The guarantee will back $526 million in commercial loans made by a consortium of international banks to SGC, which is 51% owned by the Azerbaijan government and 49% by the State Oil Company of the Azerbaijan Republic.

The ADB assistance will provide additional revenues that the government can direct to social spending and to continued efforts to diversify the hydrocarbon-dependent Azerbaijan economy.

The additional gas will be exported through a chain of pipelines, called the Southern Gas Corridor via Georgia and Turkey on to Greece, Albania, and Italy from where it can reach wider Europe. This is the first step in creating an alternative for gas deliveries to Europe from the Caspian region.

The total cost of the Shah Deniz II expansion project, being developed by a consortium of companies, is expected to top $26 billion. BP will build and operate the project facilities. Production from the project is expected to begin in 2018, and will help provide employment for over 19,000 workers through the construction phase, and create 1,800 permanent jobs.

Meanwhile, the ADB also approved today US$500 million loan to help maintain social spending, create jobs, and diversify its economy to mitigate the adverse impact of a crash in oil prices.

The loan will contribute to the government's $1.4 billion countercyclical stimulus package. The package is boosting social assistance for around 3.7 million people, or more than one third of the population, increasing the wages of public sector employees, increasing benefits for retirees and low-income families, and providing greater health, social, and food benefits to public and private workers and refugees.

In 2015, ADB approved a $475 million loan facility for Lukoil Overseas Shah Deniz to partly fund its share of the Shah Deniz gas field expansion.

Source: Qatar News Agency