A London-based bank is helping finance the development of a giant gas field located offshore Azerbaijan.

It is providing a $200 million (£120m) loan to Russia’s oil producer Lukoil, which will use the cash to further develop Stage 1 of the Shah Deniz gas field in the Caspian Sea.

The loan will pay for part of a technological upgrade of existing operations which could see output from the field increase by up to two billion cubic metres per annum (bcma). The rise will see peak production from the gas field reach 8.9 bcma.

Riccardo Puliti, Managing Director for Energy and National Resources at the European Bank for Reconstruction and Development (EBRD) said: “Stage 1 of the Shah Deniz field is crucial for the energy security of Azerbaijan, Georgia and Turkey. Our new financing will help prepare the ground for further reservoir expansion to feed the gas through the Southern Corridor – a proposed energy route from the Caspian which could potentially deliver gas all the way to the European Union.”

Shah Deniz, Azerbaijan’s biggest gas field, is being developed by consortium partners BP, Statoil, Azeri state energy firm SOCAR, Total and others and is estimated to contain 1.2 trillion cubic metres of gas.