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Nabucco sees initial gas with or without Shah Deniz II

Gas would be available from reserves held by Azeri state energy company SOCAR-says official.

September 16, 2010 10:55 by

The Nabucco pipeline consortium said on Wednesday it expects gas to flow from Azerbaijan and Iraq by late 2015 with or without phase two production at Azerbaijan’s giant Shah Deniz deposit. Azerbaijan says phase two production at the field, co-led by BP and Statoil and estimated to hold 1.2 trillion cubic metres of gas, could begin in late 2016.

Nabucco Managing Director Reinhard Mitschek said gas would be available from reserves held by Azeri state energy company SOCAR.

“I’m very confident that even before Shah Deniz II we can get some gas from Azerbaijan in combination with gas from Iraq,” he told a news conference in the Azeri capital, Baku.

Azerbaijan says it plans to send 10 billion cubic metres of gas from Shah Deniz II to Europe, but has alternatives to the 7.9 billion euro Nabucco pipeline including the Italy-Turkey-Greece Interconnector (ITGI) and the Trans-Adriatic Pipeline (TAP).

Nabucco aims to help wean Europe off its dependency on Russian gas by transporting up to 31 bcm of gas a year from the Caspian region to an Austrian hub via Turkey and eastern Europe.

This year is seen as critical for the project, which faces tough competition from Russia’s planned South Stream pipeline via the Black Sea.

Other challenges include continuing weak European gas demand, and increasing competition with China for Central Asian supplies. The start of Nabucco construction is now seen in 2012.

The consortium announced last week that it has signed an agreement with the European Investment Bank (EIB), the European Bank for Reconstruction and Development and the World Bank’s International Finance Corporation, whereby the three banks will start due diligence for loans that could reach 4 billion euros.

Kemal Abbasov, head of SOCAR’s gas export division, said on Wednesday that production at Shah Deniz II would likely begin at the end of 2016 or early 2017.

He said SOCAR hoped to secure sales contracts by October 2011.

Nabucco’s shareholders include Hungary’s MOL, Romania’s Transgaz, Bulgaria’s Bulgargaz, Turkey’s Botas, Germany’s RWE and Austria’s OMV.

(Reporting by Lada Yevgrashina and Afet Mehtiyeva; Writing by Matt Robinson; Editing by Alison Birrane)

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