Nabucco West and TAP pipelines go head to head
The Nabucco West Pipeline and the Trans-Adriatic Pipeline are two possible routes to carry gas to Europe
The consortium developing Shah Deniz II has named the Nabucco West pipeline as one of two possible routes to carry gas production from the Caspian Sea field to Europe.
The other is the Trans-Adriatic Pipeline (TAP), which was given the nod by the Shah Deniz partners in February.
“Shah Deniz will make a final decision between these projects, and will conclude related gas sales agreements ahead of the Shah Deniz II final investment decision planned for mid 2013,” BP said.
The BP-led consortium said on 28 June that Nabucco West – a smaller version of the original Nabucco pipeline – was preferred over South East Europe Pipeline (SEEP) project. In February, the consortium chose TAP as the route to Italy over the Interconnector Turkey-Greece-Italy (ITGI).
The decision comes after Turkey and Azerbaijan agreed on 26 June to go ahead with the $7bn Trans-Anatolian pipeline (TANAP), which will carry Azeri gas across Turkey to a hub close to the country’s borders with Greece and Bulgaria. Then, either the 10bn cm/y Nabucco West pipeline will take gas from the Turkey-Bulgaria border to Baumgarten in Austria or the 10bn cm/y TAP project will take gas from Greece to Italy.
Azerbaijan’s Shah Deniz II gas development is expected to export 16bn cubic metres of gas a year (cm/y) westward, of which 6bn cm/y will go to Turkey and the rest to Europe.
The consortium’s decision to opt for Nabucco West gives a boost to the project which was unable to attract enough gas supplies and deemed too expensive in its original form.
“This decision is an important milestone for the Nabucco project and a major step towards the final investment decision,” Reinhard Mitschek, managing director of Nabucco, said.
In a conference call to reporters on 29 June, Mitschek was unable to give a date for the final investment decision and also unable to give a project cost for Nabucco West until the front end engineering design (FEED) for the pared-down pipeline had been completed.
He was also unable to give a firm schedule for construction and start up, but assumed “not many milestones will change” from the original Nabucco plan.
Construction of the original 31bn cm/y Nabucco project was scheduled to start by the end of 2013 with first gas in 2017. Original project costs were put at an estimated €7.9bn ($9.8bn).
Mitschek added that Nabucco West’s capacity could be expanded to as much as 23bn cm/y, saying the pipeline could carry gas from Turkmenistan and Iraq to Europe. Nabucco West would have physical reverse flow capacity, meaning gas could flow from Austria to Turkey, he said.
The Shah Deniz partners – operator BP (25.5%), Statoil (25.5%), with the remainder divided between Socar, Lukoil, Nico, Total and TPAO – will now reassess the TAP and Nabucco West options. A decision is expected next year.
"I am pleased to see that the Shah Deniz consortium’s decision-making process has taken another important step forward with the choice of a potential central European route. This now clears the way for the ultimate decision between TAP and Nabucco West,” Kjeitl Tungland, managing director of TAP said.
Both pipelines are Southern Corridor projects, which aim to reduce European reliance on Russian gas imports by sourcing the fuel from Caspian developments. The European Commission (EC) initially threw its weight behind Nabucco, but has since said it would back any project which would diversify Europe’s gas supply sources.
"With this pre-selection, we are a step closer to getting gas directly from Azerbaijan and other countries in the Caspian region," (EC) Energy Commissioner Günther Oettinger said.
“Whatever the final decision on the whole route from the Eastern part of Turkey to Europe, Azerbaijani gas is certain to come to Europe.”
Russia is also building its own 63bn cm/y South Stream Southern Corridor pipeline across the Black Sea to Bulgaria to compete with Caspian supplies, with construction expected to start by the end of 2012.
Shah Deniz is believed to hold 1.2 trillion cm of gas.