The consortium developing Azerbaijan's Shah Deniz II gas field has narrowed the number of groups competing to build infrastructure to carry gas to Europe by selecting the Trans-Adriatic Pipeline (TAP) project for the Italian pipeline option, to the detriment of the rival Interconnector Turkey-Greece-Italy (ITGI) project, Reuters announced.
ITGI was being developed by Italy's Edison and DEPA. Azerbaijan is doubtful that under the current crisis Greece would be able to carry on with the project, sources told EurActiv. The Greek government's privatisation plan to be launched later this year includes DEPA.
The consortium would prefer the TAP as its partner should it decide to send the gas through Turkey to Italy, a spokesman for BP told Reuters yesterday (20 February) [See map]. The TAP partner companies are Norway's Statoil, Swiss EGL and Germany's E.ON Ruhrgas.
TAP would run 800 km from Komotini in Greece, near the border with Turkey, through Greece and Albania, to end near San Foca, Italy.
Business sources said told EurActiv the disadvantage of TAP is that there is no intergovernmental agreement on its route through Greece, Albania and Italy. It is included in an accord signed in 2009 between Italy and Albania.
In a joint statement with the Greek environment and energy ministry, Italy said the two countries reiterate their support for ITGI, Dow Jones reported.
But ITGI is apparently over. "There were originally four options to carry the gas from Shah Deniz. Now the decision has been taken not go ahead with ITGI, so now we're down to three options," the BP spokesman told Reuters.
Three competitors remain in the game
He did not name the three options but the other competitors besides TAP are Nabucco and BP's own pipeline project from Turkey to the Romanian-Hungarian border, called SEEP (South East Europe Pipeline).
“We are pleased to confirm that TAP has been selected by Shah Deniz as the pipeline route to Italy, Kjetil Tungland, TAP's managing director, said in a statement.
"We look forward to progressing the TAP project together with the Shah Deniz Consortium and the Italian, Albanian and Greek governments. We firmly believe that TAP remains a strong contender to win the bid to transport Shah Deniz II gas to Europe. We are also confident that the TAP route to Italy offers the Shah Deniz consortium the most attractive market and the most advanced evacuation route," Tungland stated.
BP operates the Shah Deniz II gas field, which is thought to contain 1.2 trillion cubic meters of gas, and holds a 25.5% stake, as does Statoil. The rest is divided between the Azerbaijani state company SOCAR, Russia's LUKOIL, Iran's NIOC, France's Total and Turkey's TPAO.
New player: TANAP
The launching of the trans-Anatolian gas pipeline project (TANAP) may finally change the concept of alternative gas supplies to Europe, the Russian media reported. Official Baku says that it plans to sign soon an agreement with Turkey to build TANAP, led by Azeri state oil company SOCAR, which would transport Azeri gas through Turkey to the border with the rest of Europe.
According to experts, TANAP may make redundant the main advantage of the Nabucco pipeline project which plans to transport over 30 bcm of central Asian gas through Turkey, Bulgaria, Romania and Hungary.
Like TANAP, Nabucco plans to lay down new pipes to carry Azeri gas to Europe.
In contast, TAP favours using and upgrading Turkey's existing pipeline network, potentially making it compatible with TANAP. TAP aims to become operational in 2017 and would carry 10 billion cubic metres (bcm) of Caspian gas a year and be scalable to a maximum capacity of 20 bcm.
Konstantin Simonov, head of the Moscow-based National Energy Security Foundation, called Nabucco "the weakest chain" of the competitors for Azeri gas, at this project alone would need all the gas produced at Shah Deniz II. Reportedly, the authorities of Azerbaijan would like to minimise risks by not placing "all their eggs in one basket".
Nabucco may prove too costly under the present economic circumstance. It was estimated to cost €7.9 billion, but sources say that could rise as high as €12 billion to €15 billion.
A spokesman for the Nabucco consortium said that negotiations between the Nabucco shareholders and the Shah Deniz II consortium were ongoing.
"We are confident that Nabucco submitted the most competitive solution for the southern corridor," he said.