Azerbaijan postpones gas auction decision

Shah Deniz II.jpg

Azerbaijan has delayed until March 2012 a decision on which bidder will get natural gas produced as part of the Shah Deniz field's second stage. Nabucco and three other pipeline projects are competing in the auction and results were expected this month.

"At present, the proposals submitted by the pipeline consortia are still being carefully studied," Rovnag Abdullayev, president of state oil company SOCAR, was quoted as saying yesterday (12 December).

"There was never the goal of deciding on a route by the end of the year. This process will probably continue until the first quarter of 2012," Azeri media reported.

Nabucco, the Interconnector Turkey-Greece-Italy (ITGI) and the Trans-Adriatic Pipeline (TAP) consortia are vying to build the infrastructure to carry gas to Europe from the second phase of Azerbaijan's Shah Deniz gas field. One more option is a pipeline from Turkey to the Romania-Hungary border, a route proposed by British energy giant BP days before a deadline for consortia to submit bids.

Shah Deniz is being developed by BP, Statoil and Azeri SOCAR. It is estimated to contain 1.2 trillion cubic metres of gas, which European companies hope can supply them for decades and cut dependence on Russia.

Production was launched in 2006, with the second phase expected to start by 2017.

Abdullayev dismissed speculation that the EU-backed 31-billion-cubic-metre Nabucco pipeline was not an option any more.

"Nabucco as well as TAP and ITGI is under consideration," he said.

However, another senior SOCAR executive, Vagif Aliyev, said at the end of November that the Nabucco project had "unresolved issues", though he did not expand on them.

Europe's efforts to cut its dependence on Russian gas have been dealt a blow by renewed financial turmoil in Europe, where two of the proposed pipelines, ITGI and TAP, cross Greek territory.

At a cost of more than €10 billion, Nabucco is "not cheap", EU Energy Commissioner Günther  Oettinger said on 4 November, as quoted by Reuters.

Several pipeline projects are competing to bring to life the southern natural gas corridor – a vague blueprint to supply Europe with gas from the Caspian and the Middle East. [more]

As the promoters of the projects have suggested, some of them could pool together their strongest assets and eventually merge. Some smaller projects could become the backbone of bigger projects, when the conditions allow it and if the demand for gas in Europe increases.

In February 2011, EU officials were reportedly pushing for a merger between Nabucco and Interconnector Turkey-Greece -Italy (ITGI), and the European Commission later confirmed that it was encouraging cooperation between projects in the southern corridor.

In an exclusive interview with EURACTIV, Nabucco Managing Director Reinhard Mitschek said he was confident that this project was a "unique selling proposition", because it offers unified transport conditions from the eastern Turkish border to Central Europe. The other projects rely on the Turkish gas pipeline network.

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