Shah Deniz consortium agrees to a deal to obtain a 50% stake in Nabucco pipeline

The Shah Deniz gas group has agreed a deal to obtain a stake in the Nabucco pipeline, boosting the gas pipeline project's chances against a rival pipeline.

Last year, the Shah Deniz 2 consortium signed a funding deal with the competing Trans-Adriatic pipeline (TAP) project. The consortium has always said a stake in Nabucco would be critical for the project to go ahead.

TAP plans to pipe Azeri gas to Italy, while Nabucco would transport Caspian supplies to Europe via Austria.

The companies behind the Nabucco pipeline have confirmed that the deal would give Shah Deniz 2 a 50% stake if it chooses their project as its European export route, in return for joint funding and development of the pipeline.

"With real upstream people as partners, we move in the direction of developing more than just something on a paper, but into direction of a real pipeline," said Gerhard Roiss, Chief Executive of Austria's OMV, a shareholder in Nabucco.

In order to reduce its dependency on Russian gas imports, the EU is supportive of Azeri gas supplies reaching the region, regardless of which pipeline is chosen.

Analysts were not bewildered by the deal, saying the Shah Deniz 2 group, whose shareholders include Azerbaijani state energy firm SOCAR, was trying to boost its negotiating power ahead of making a decision over which pipeline to choose.

"This move (was) anticipated after the decision of funding TAP. Shah Deniz 2 partners are making sure they have got some sort of control over the midstream development, and doing this before a final decision on which pipeline will go ahead provides them more leverage," said Massimo Di-Odoardo, Senior Gas Analyst at energy consultancy Wood Mackenzie.

Developing the biggest gas field in the Caspian Sea region, the Shah Deniz 2 consortium has narrowed its pipeline route options to either a scaled down Nabucco project, known as Nabucco West, or to TAP.

Several other pipeline projects, including the Interconnector Turkey-Greece-Italy (ITGI) and the South East Europe Pipeline (SEEP), have been dropped from the competition.

Initially, the Nabucco gas pipeline project was designed to transport a 32 billion m³/yr of Azeri and other central Asian gas through Turkey and southeastern Europe into Austria. However, high costs and a lack of gas suppliers has led to the project being downsized. The smaller, Nabucco West project aims to carry 16 billion m³/yr of gas from the Turkish border to Austria, connecting with the joint Azeri-Turkish TANAP pipeline.

Edited from various sources by Cecilia Rehn.

Read the article online at: https://www.worldpipelines.com/business-news/11012013/shah_deniz_consortium_agrees_to_a_deal_to_obtain_a_50_stake_in_nabucco_pipeline-291/