BP seeks stake in pipeline to export Azerbaijani gas

BP seeks stake in pipeline to export Azerbaijani gas

BP is interested in acquiring a significant share in the Trans Adriatic Pipeline (TAP) or Nabucco-West pipeline projects seeking to supply Azerbaijani gas to Europe, the company`s vice-president for development of Azerbaijan`s Shah Deniz gas field, Al Cook, was quoted as saying by Argus Media, a UK-based independent provider of market data and business intelligence.

In late June, the consortium of companies developing the Shah Deniz field in the Caspian Sea is to announce which of the two projects – Nabucco-West or South East Europe Pipeline (SEEP), proposed by BP, will be the Central European (Austria) supply route within the Southern Gas Corridor. The winner of this pair will compete for the leadership with TAP project, previously chosen as the southern European (Italy) route of gas supply.

A final choice as to which of the remaining projects will open the Southern Gas Corridor is to be made in summer 2013.

Azerbaijani news agency Trend`s analyst Azer Ahmadbayli says BP`s intention to buy a significant share in one of the two projects could be a circumstance that will significantly affect further actions of all concerned parties, including European financial institutions, and change the existing conditions and agreements.

First, the announcement made by BP stipulates that the company has its own concept for gas delivery to Europe.

Second, as a member of the Shah Deniz consortium, BP will sell gas and be co-owner of the transport artery. It will be able to participate in making final decisions on such issues as setting tariffs for pumping, which, at least, is not bad for the other vendors participating in the consortium.

Third, a final decision on choosing the route depends on BP as one of the key Shah Deniz shareholders. Therefore, possible acquisition of shares will further boost competition between the two remaining transport projects until one of them is selected. In other words, realizing that BP will buy shares of the winning project, each project will make every effort to succeed. The competition will force them to revise the existing proposals and propose new, perhaps, more favorable ones for the Shah Deniz consortium.

Finally, such a step, in general, will greatly enhance the concept of the Southern Gas Corridor. In terms of importance for the opening of the corridor to Europe, this decision of BP to some extent can be compared with the decision of Azerbaijan and Turkey to construct the Trans-Anatolian Pipeline (TANAP).

Interest in equity in the projects on gas transportation to Europe is not only the desire of the British company. Last summer, Azerbaijani state energy firm Socar said that, regardless of whichever pipeline project is eventually selected for the transportation of Azerbaijani gas to Europe from the Shah Deniz field, the company intends to acquire equity in it. It is possible that other key Shah Deniz stakeholders – Statoil and Total – have similar plans.

By the way, increase in the number of shareholders, apparently, will also apply to TANAP, in which the Turkish Botas and Socar have 20 and 80 percent stakes, respectively. Socar`s senior officials have already expressed support for joining in the project of other international companies involved in Shah Deniz development and engaged in gas production in the region.

The goal of BP, Socar, and perhaps others is to become involved in gas transportation, to be aware of the situation inside and have the opportunity to influence transport policies of the project to deliver gas in all directions. Socar head Rovnag Abdullayev said European buyers should be aware that the Shah Deniz consortium and Azerbaijan will implement the multi-billion dollar investment to be able to supply gas to Europe, and for that, “our task as suppliers of gas is not just to export gas, but to do so at the best price.“

The Southern Gas Corridor is one of the priority energy projects for the EU, designed to diversify the routes and sources of supply and thus increase European energy security. Gas to be produced during the second phase of Shah Deniz gas field development, which is expected to start by the end of 2017, is considered as the main source for the project. Reserves of the Shah Deniz field are estimated at 1.2 trillion cubic meters.



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