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Gas Consortium excludes ITGI as European gas link

World Pipelines,


In a first major decision of a process spanning several years to boost Europe’s natural gas supply diversification, Shah Deniz, the consortium developing a natural gas field offshore Azerbaijan, has narrowed down its options for carrying that gas to Europe.

Energy giant BP PLC, who has a stake in Shah Deniz, revealed recently that the consortium has excluded the Interconnector Turkey-Greece-Italy (ITGI) pipeline project from those being considered to carry the gas to Europe. This means the Trans-Adriatic Pipeline (TAP) will be negotiating exclusively to carry the gas from the Caspian to Italy.

"The SOCAR-led [Azerbaijan's state-controlled energy company] negotiating team has made the decision to undertake exclusive negotiations with TAP on a southern pipeline route through Italy," a spokesman for BP said. The decision means that ITGI's proposal "will not be considered further," he explained.

The news marks a breakthrough, after years of fierce battle among different pipeline projects, in the EU’s aim of opening a ‘corridor’ from Central Asia across Turkey and getting new suppliers in an energy-rich region to ease Europe’s dependence on Russia.

Two other projects, Nabucco and the South East Europe Pipeline (SEEP) – both designed to carry the gas to Central Europe – are still in the competition, according to the BP spokesman. Once the consortium has decided between these alternatives, the focus will be on routing. The gas could either be piped north to Central Europe, or south to Italy.

Then news is a blow for the two sponsors behind ITGI: Italian energy company Edison SpA and Greek gas company DEPA, both of which have spent huge resources in promoting it. The financial situation in Greece and Italy, together with technical considerations about the pipelines, were some of the reasons behind the choice, according to a person familiar with the talks. However, Edison has reaffirmed its commitment to the pipeline designed to carry the gas from Greece to southern Italy, bypassing Albania.

"Edison doesn't comment [on the news] since it hasn't received any formal announcement from the Shah Deniz Consortium but it confirms its strong commitment to ITGI's development," a company official said recently.

As ITGI would carry the gas from Greece to southern Italy, TAP would do the same, but without bypassing Albania. Its sponsors are Swiss energy-trading company Elektrizitats-Gesellschaft Laufenburg AG, Germany's E.ON AG and Norway's energy giant Statoil ASA, which is also one of the two main shareholders of the Shah Deniz consortium.

"We firmly believe that TAP remains a strong contender to win the bid to transport Shah Deniz II gas to Europe," said Kjetil Tungland, TAP's Managing Director, in a statement. "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."

Shah Deniz II is expected to add roughly 16 billion m3 of annual production as early as 2018, 10 billion m3 of which would be ready for export to the EU. BP and Statoil both own 25.5% stakes of Shah Deniz. SOCAR, OAO Lukoil Holdings of Russia, France's Total SA and National Iranian Oil Company all own 10% each, while Turkey's TPAO owns 9%.

Read the article online at: https://www.worldpipelines.com/business-news/21022012/gas_consortium_excludes_itgi_as_european_gas_link-/

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