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British oil giant BP plc’s (BP - Analyst Report) shares nudged up 0.3% to close at $42.46 per share on Friday as investors cheered the recently concluded 25-year sales agreements of the Shah Deniz consortium. The consortium, of which BP is the operator, has closed the deals for just over 10 billion cubic meters a year (BCMA) of gas.

The gas produced at the Shah Deniz field in Azerbaijan will be directly transported to Europe for the first time, thanks to the development of Stage 2 of the Shah Deniz project. This agreement will open up the Southern Gas Corridor.

About 16 BCMA of Shah Deniz Stage 2 gas will be transferred through 3,500 kilometers of pipelines via Azerbaijan, Georgia, Turkey, Greece, Bulgaria, Albania and under the Adriatic Sea to Italy. This gas would be bought by nine companies in Italy, Greece and Bulgaria.

The latest agreement follows the pact with BOTAS in 2011, to sell 6 BCMA of gas in Turkey. The parties that have agreed to purchase the gas are Axpo Trading AG, Bulgargaz EAD, DEPA Public Gas Corporation of Greece S.A., Enel Trade SpA, E.ON Global Commodities SE, Gas Natural Aprovisionamientos SDG SA, GDF SUEZ S.A., Hera Trading srl and Shell Energy Europe Limited.

Of the total quantity booked, about 1 BCMA will go to buyers planning to supply to Bulgaria and Greece and the balance will go to buyers planning to supply to Italy and neighboring markets. The gas sales agreements will be implemented after the final investment decision on the Shah Deniz Stage 2 project is made by the end of 2013.

BP has a stake of 25.5% in Shah Deniz. Other co-venturers are Statoil ASA (STO - Analyst Report), SOCAR, Total SA (TOT - Analyst Report), Lukoil, NIKO and TPAO with a holding of 25.5%, 10%, 10%, 10%, 10% and 9%, respectively.

BP carries a Zacks Rank #3 (Hold). However, the Zacks Ranked #1 (Strong Buy) stock of China Petroleum & Chemical Corp. (SNP - Analyst Report) is a good buying option for the short term.

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