UpdateNabucco project 'over' after Shah Deniz defeat, says OMV CEO

26 June 2013 17:21  [Source: ICIS news]

(releads and updates throughout)

LONDON (ICIS)--The decade-old Nabucco gas pipeline infrastructure project is essentially over as far as main shareholder OMV is concerned, the Austrian oil, gas and petrochemical group's CEO said on Wednesday.

CEO Gerhard Roiss was speaking after earlier on Wednesday OMV announced that the Nabucco Gas Pipeline International (NGPI) consortium had failed to win export rights to the prized gas of Azerbaijan's Shah Deniz II gas field.

“The Nabucco project is over for us,” said Roiss, ending speculation that OMV might push NGPI to source gas from other fields and thereby maintain Nabucco's viability as a project that could import gas for the diversification of the EU's gas supplies.

Roiss also disclosed that the Shah Deniz consortium had pointed to higher gas prices in Greece and Italy as a reason for not awarding the export rights to Nabucco – the rights might now go to the rival 800-km Trans Adriatic Pipeline (TAP) project which would transport the gas to southern Italy via a route across Greece, Albania and the Adriatic Sea – and suggested that observers might want to question whether this was merely “a fig leaf for a political decision”.

Shah Deniz II specifically rejected the scaled-down 1,300-km Nabucco West proposal to transport the gas from the Bulgarian-Turkish border to the Baumgarten gas hub in Austria. NGPI introduced Nabucco West after the original Nabucco 3,900-km proposal to transport the gas to the hub all the way from Azerbaijan was deemed by critics as too vulnerable to a lack of gas supply contracts.

“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 EU originally backed Nabucco over TAP as its preferred project, but earlier this year it changed its stance to neutral.

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 meet the EU's strategic aim to diversify its energy supplies.

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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