Deadline Nears for Shah Deniz Contenders

March 28, 2013

Natural Gas Europe reports that final submissions for the pipeline to complete the journey of gas from Shah Deniz field in Azerbaijan to western Europe face a deadline within days.

The choice before Azerbaijan and the Shah Deniz consortium - in which BP, Norway's Statoil and Azerbaijan's Socar are the main players - will be to choose one of two determined consortia, the Trans Adriatic Pipeline (TAP) and Nabucco West. The two contenders have to present their final bid packages by March 31. A preliminary decision is expected in June, with final confirmation in October.

The gas will first be sent from Shah Deniz to the Georgian-Turkish border via an existing pipeline, from where it will hook up to the planned Trans-Anatolian Natural Gas Pipeline (TANAP) that's being built by Azerbaijan and Turkey, which will then transport the gas to the Turkish-European border. A volume of 10 billion cubic meters (bcm) is anticipated every year from 2019.

TAP is a private sector project that will run from the Turkey-Greece border via Greece and Albania and onward under the Adriatic Sea to southern Italy. TAP's main players are Axpo of Switzerland (42.5%), Norway's Statoil (42.5%), and Germany's E.ON Ruhrgas (15%).

Kjetil Tungland, TAP's managing director, is talking confidence. "I think the odds are highly in our favour because we were more in front technically and commercially all the time, but politically we had to catch up," Tungland said.

Balkans Business website comments that Nabucco West is the remnant of an ambitious - and ultimately doomed - EU-backed plan to bring gas all the way from the Shah Deniz field to Austria. It had huge political backing, but was found to be lacking in economic feasibility.The shorter version of Nabucco (1,300 km) will pick up from TANAP at the Turkish-Bulgarian border and run to the gas hub at Baumgarten near Vienna, via Romania and Hungary. Nabucco West's shareholders are Austria's OMV, Hungary's Mol, Romania's Transgaz, Bulgarian Energy Holding, Turkey's Botas and Germany's RWE.

Analysts too say that on the face of it, TAP looks a better bet, since it offers a shorter route with fewer transit countries and fewer partners to complicate matters. Another possible advantage is the presence of Statoil in both the consortium developing Shah Deniz, and in TAP's pipeline project.

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