The Asian Development Bank (ADB) has signed a US$500mn loan agreement and a guarantee agreement with the government of Azerbaijan for the Shah Deniz 2 gas project.

This marks the second hefty loan the ADB has doled out to the gas field in Azerbaijan, which will provide natural gas from the Caspian Sea to Europe from the Southern Gas Corridor, which passes through Georgia and Turkey.

In 2015, the ADB provided US$250mn to a total funding kitty of US$1bn for the same project. In this instance it was joined by a range of development and commercial banks, including the European Bank for Reconstruction and Development (EBRD), the Black Sea Trade and Development Bank (BSTDB), the Bank of China, ING, Société Générale and UniCredit.

The latest agreement was signed between Azerbaijan’s finance minister Samir Sharifov and the ADB President Takehiko Nakao at the development bank’s annual meeting in Tokyo this week.

With a total project cost of US$26bn, Shah Deniz 2 is one of the largest ongoing energy projects in the world. It is being built and developed by a consortium of workers, and its economic significance is matched if not exceeded by its strategic importance.

The field and the export infrastructure constructed around it will link up to the giant Trans-Anatolian Natural Gas Pipeline (TANAP) and Trans-Adriatic Pipeline (TAP). These facilities, also running through Turkey, are considered vital sources of energy by the European Union, as the bloc continues to seek alternatives to Russian gas.

Russia is still subject to EU sanctions, although Gazprom is developing a Southern Corridor of its own, which it hopes will eventually allow it to provide gas to European markets. In March, the company signed an MoU with Italian energy provider Eni to “analyse prospects of co-operation in the sphere of developing the southern corridor of gas supplies from Russia to European nations, particularly to Italy, and upgrading contracts on Russian gas supply to the republic”.

With regard Azerbaijan’s Shah Deniz project, the ADB has previously described it as “one of the EU’s highest priorities for the energy sector”.

Speaking last year, the deputy director general of private sector operations Michael Barrow said: “This will be the largest gas field development project undertaken in Azerbaijan, generating more economic opportunities and helping to boost closer regional ties with Georgia and Europe. ADB’s involvement has helped catalyse long-term bank financing support from commercial banks.”