Nabucco remains in competition for Azeri gas
The Nabucco West project still has a chance of winning the contest to transport gas from Azerbaijan to European countries, even after a rival consortium signed a funding deal, an executive of the country's state oil firm said.
Azerbaijan is prepared to cooperate further with Nabucco West and the Trans-Adriatic Pipeline (TAP) via Greece to Italy, the representative of the SOCAR gas company said yesterday (19 August).
"The agreement with TAP gives the partners more legal and planning security. It is not a decision against Nabucco-West," Elmar Mamedov, SOCAR representative for Germany said in a statement quoted by Reuters, adding that his company wanted to agree the same deal with the Nabucco West consortium (see background).
Both Nabucco West, a shorter version of the original Nabucco pipeline, and TAP are bidding for the same gas from the offshore Shah Deniz II field in the Caspian Sea that is expected to come upstream in 2017. Shah Deniz partners are expected to decide next year which pipeline they will choose for gas exports.
The TAP project has reached a funding deal with companies in the Shah Deniz consortium - BP, SOCAR and Total - thus boosting its chances of winning the contest.
The pipeline decision is part of a long process of elimination to choose a new pipeline to create outlets for Azeri gas. A new pipeline would also break Russia's dominance of the European Union natural gas market.
On 14 August Hungary became the first country to complete the permitting process for Nabucco West.
Originally, Nabucco was designed to bring Azeri gas to Baumgarten, a gas hub near Vienna. Later, projects for branches to transport part of this gas from Greece to Italy were developed. It is still unclear if the Shah Deniz consortium will chose one of the routes, or both.
TAP's shareholders are EGL of Switzerland (42.5%), Norway's Statoil (42.5%) and E.ON Ruhrgas of Germany (15%).
Nabucco's six shareholders are Austria's OMV AG; Germany's RWE AG; Hungary's MOL through its gas pipeline operator FGSZ; Turkey's Botas; BEH of Bulgaria; and Romania's Transgaz.
In July, Russian natural gas giant Gazprom and Italy's oil and gas major Eni announced they aim to start building the South Stream gas pipeline in December. South Stream is seen as a political project aimed at making the original Nabucco project irrelevant.
South Stream is expected to cost more than €15 billion and export some 63 billion cubic metres of gas per year to southern Europe as of 2015. Eni has said earlier it expected the final investment decision in late 2012 or early 2013.
Several pipeline projects are competing with one another to bring to life the southern gas corridor – a vague blueprint to supply Europe with gas from the Caspian and the Middle East.
Initially the EU’s flagship project was Nabucco, designed to supply to Europe from the Caucasus and the Middle East to a gas hub in Austria, via Turkey, Bulgaria and Romania.
The construction of Nabucco was expected to start in 2013 and the first gas is expected to flow in 2017. As planned, the pipeline would carry 31 billions of cubic metres per year (bcm/y) of gas.
But now only three smaller pipeline projects appear to be in competition to bring the gas from the Turkish-EU border deeper into the European Union:
- Nabucco West: via Bulgaria and Romania to Austria
- South East Europe Pipeline (SEEP): via Bulgaria and Romania to Hungary
- Trans-Adriatic Pipeline (TAP): via Greece to Italy