‘Southern corridor’ competitors bid for Azeri gas

Shah Deniz II.jpg

Competitors in the race to give life to the 'Southern gas corridor,' aimed at supplying Europe with non-Russian gas sources, have all lodged bids to obtain the 10 billion cubic meters per year which will be available from the offshore Shah Deniz II field in Azerbaijan.

Almost simultaneously, Nabucco, the Turkey-Greece-Italy Interconnector ITGI, and the Trans Adriatic pipeline TAP published press releases, announcing that they had submitted offers to the State Oil Company of the Azerbaijan Republic (SOCAR). The deadline for submitting proposals expired on Saturday (1 October), and bids are confidential.

The Azeri contractor is expected to make its decision known by late 2011. Azeri gas is expected to be available for use in Europe from 2017. All bidders promise the pipeline will be ready by then, but construction is conditional on them clinching the Azeri bid.

British Petroleum has reportedly also unveiled a pipeline bid, an alternative to the existing three. The source said the plan was a long-term idea by both the Azerbaijan government and BP, Turkish daily Hurriyet reported.

Media in Azerbaijan reported that the proposals would be reviewed according to commercial attractiveness, technical and financial feasibility, engineering and design work, management, coordination and transparency, and the possibility of phased scale-up of the project amid other criteria.

Rovnag Abdullayev, the president of Azerbaijan's state oil company SOCAR, reportedly said that Azerbaijan was considering all the options to transport its gas to Europe, including ITGI, TAP, Nabucco and White Stream.

However White Stream, a project supported by the former Ukrainian government to bring gas to Western Europe via Georgia, Ukraine and Romania or Bulgaria, appears to have lost political backing in the meantime.

The best of all

The competing consortiums exhorted their own bids' relative strengths.

Reinhard Mitschek, Managing Director of Nabucco, reportedly underlined that the project has political support and stability propped by a 50-year-long treaty signed by all five transit countries (Austria, Hungary, Romania, Bulgaria and Turkey), supported by bilateral project support agreements.

Harry Sachinis, Chairman and CEO of DEPA, the Gas Corporation of Greece, stated on behalf of ITGI, the Turkey-Greece-Italy Interconnector, that this project was able to deliver Azeri gas to Europe in the shortest possible time and at the lowest cost.

"The ITGI system can be operational as early as 2013 – sooner than any other pipeline option – and is the only project that can meet the timeline demanded by the Shah Deniz II full field. The ITGI system is the most compelling in every respect,” Sachinis inisted.

In an exclusive interview for EURACTIV, Sachinis said that the ITGI system was "the most technically advanced of the various projects". 

"It is ready to go," he hammered out. For their part, the Trans Adriatic Pipeline TAP stated that this was "the shortest and most financially viable of the proposed options".

"It is scalable and provides an efficient and cost-effective means of realising the increasing volumes of gas from the Caspian – and further afield – as they become available," a statement read.

Clearly referring to Nabucco and to Poseidon, the offshore section of the ITGI pipeline, TAP Managing Director Kjetil Tungland said:

"[Our] project may not be named after a Verdi opera or the Greek god of the sea, but [our] team of professionals has enough sense of history to know just what is at stake. All we ask is for our project to be judged on its merits."

According to their statements, each of the three competitors Nabucco, ITGI and TAP hopes to obtain all of the 10 bcm per year from the Shah Deniz II consortium in Azerbaijan. But Azeri officials have hinted that Baku would not put all its eggs in one basket and could allocate the 10 bcm to more than one European bidder.

Georgi Gotev

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. [more]

As the promoters of some 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 ITGI, and the European Commission later confirmed that it was encouraging cooperation between projects in the Southern Gas Corridor.

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