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BP Delivers Gas From Shah Deniz to Europe, Boosts Competition

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BP plc (BP - Free Report) recently announced that it has started delivering commercial natural gas to Europe from offshore Azerbaijan. The move is expected to increase competition in a lucrative energy market, which was primarily dominated by Russia. The commodity will come from the Shah Deniz gas field in the Caspian Sea.

Notably, the company will transport natural gas using the $33-billion Southern Gas Corridor (“SGC”) pipeline system. The entire SGC gas value chain covers 3,500 kilometers, connecting Azerbaijan to Europe. It was built in seven years. The final stage of the SGC system, Trans Adriatic Pipeline covers 878 kilometers across Albania, Greece and Italy. The SGC system will likely boost global energy security and diversify supply sources. The announcement comes at a time when Russia is still trying to develop the Nord Stream 2 gas pipeline, which will connect to Germany.

The project received support from the European Union, which worked on reducing dependency on Russia. Importantly, Azerbaijan intends to transport 10 billion cubic meters (bcm) of natural gas per annum to Europe in the next 25 years. Of the total, 8 bcm of natural gas will likely go to Italy, while 1 bcm of natural gas each will be shipped to Bulgaria and Greece.

BP is the operator in the Shah Deniz gas field with a 28.8% stake. It has several partners in the field including SGC Upstream, PETRONAS of Malaysia and LUKOIL of Russia. The field was discovered in 1999. It is spread across 860 square kilometers. The field is estimated to have 1 trillion cubic meters of natural gas and 2 billion barrels of condensate in the reserve. It has already produced more than 130 bcm of natural gas and 31 million tons of condensate from the field.

Price Performance

BP’s shares have risen 19.4% in the past three months compared with 24% increase of the industry it belongs to.

Zacks Rank & Stocks to Consider

BP currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include TC PipeLines, LP (TCP - Free Report) , Cactus, Inc. (WHD - Free Report) and Summit Midstream Partners, LP (SMLP - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

TC PipeLines’ bottom-line estimates for 2021 have increased nearly 4% in the past 60 days.

Cactus’ bottom-line estimates for 2021 have increased 26.8% in the past 60 days.

Summit Midstream’s bottom-line estimates for 2021 have increased 24% in the past 60 days.

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Cactus, Inc. (WHD) - free report >>