Nabucco West pipeline project rejected by Azerbaijan's Shah Deniz II

26 June 2013 13:31  [Source: ICIS news]

LONDON (ICIS)--Nabucco West has not been selected as the preferred gas pipeline transportation project by the Azerbaijan-based Shah Deniz II consortium, Nabucco shareholder OMV said on Wednesday.

“While OMV accepts the decision of the consortium, OMV is of the opinion that the offer which was submitted by NGPI [the Nabucco Gas Pipeline International consortium] met all the selection criteria and was highly competitive,” OMV said in a statement on the decision.

The rejection of the Nabucco West proposal – a decade in the planning – for transporting Shah Deniz II gas field output to the EU means the export rights may go to a rival project, the 800-km Trans Adriatic Pipeline (TAP), which follows a route across Greece, Albania and the Adriatic Sea to southern Italy.

Owned by Swiss Axpo (42.5%), Norway's Statoil (42.5%) and Germany's E.ON (15%), Switzerland-based TAP would pick up 10-20bn cubic metres/year of Shah Deniz II gas transported to Greece's eastern border with Turkey, before sending it along its alternative 'southern corridor' route to help diversify the EU's gas supplies.

NGPI originally intended to transport the gas 3,900 km (2,423 miles) from Azerbaijan to the Baumgarten gas hub in Austria, but following concerns that it would not be able to sign enough gas-supply contracts to keep its pipeline system viable, the consortium opted to switch to the scaled-down Nabucco West, a 1,300-km project that would draw the gas from a point on the Bulgarian/Turkish border.

In its statement on the decision not to award Nabucco West the export rights, OMV added: “The decision does not influence OMV’s strategy of growing upstream and integrated gas. OMV intends to play a role in further securing and diversifying the gas supply to Europe and will assess alternatives to complement the existing supply routes. OMV believes that a lot of highly valuable work and goodwill has been put into this project which will pay off in future projects.”

NGPI's shareholders are OMV, France's GDF Suez, BEH of Bulgaria, BOTAS of Turkey, FGSZ of Hungary and Transgaz of Romania.

Shah Deniz is structured as an unincorporated joint venture partnership, with BP as an operator and partner. The State Oil Company of the Azerbaijan Republic (SOCAR) is the domestic partner.

By: Will Conroy
+44 20 8652 3214

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