VIENNA Jan 31The two consortiums competing to
pipe Azerbaijan's Caspian Sea gas into Western European markets
still have an equal chance of success, the Shah Deniz gas field
operator BP said on Thursday.
The Shah Deniz consortium is expected to choose by mid-2013
whether to pipe gas from the Shah Deniz development into Austria
through the proposed Nabucco West pipeline or into Italy through
the rival Trans-Adriatic Pipeline (TAP) project.
"I genuinely believe both pipelines at the moment have an
equal chance," said Al Cook, who is in charge of BP's Azeri
operations. "There's certainly no clear-cut answer at the
moment," he told reporters at a conference in Vienna.
BP is aiming for first gas from Shah Deniz II to be
delivered to existing customer Turkey in 2018 with early 2019
set for the first Azeri gas to reach western Europe in a major
development that will reduce European dependence on Russia for
its energy supplies.
The selected pipeline will bring billions of dollars in
investments for the countries through which it travels -
Bulgaria, Romania, Hungary and Austria in the case of Nabucco,
and Greece, Albania and Italy if TAP wins the contest.
The Trans-Anatolian gas pipeline (TANAP) will bring the
Azeri gas through Turkey to the edge of Europe to connect either
with Nabucco West or TAP.
Shah Deniz, Azerbaijan's biggest gas field, is being
developed by consortium partners BP, Statoil, Azeri
state energy firm SOCAR, Total and others and is
estimated to contain 1.2 trillion cubic metres of gas.
Shah Deniz I has been pumping gas since 2006.
After a deal signed earlier this month, the Shah Deniz
consortium owns equity options in both pipeline projects.
Cook said BP had sent out questionnaires on Wednesday to
Nabucco and TAP, asking them identical questions about their
respective projects, to which it expects answers soon, enabling
it to make a decision by the end of June.
The criteria include profitability, engineering quality,
safety and environmental provisions, the political commitment of
the governments involved, quality of personnel and potential for
future expansion, Cook said.
"Fundamental amongst them is obviously the commerciality,"
he said, adding that the customer supply contracts that each of
the rivals could achieve would be a major factor.
Socar began negotiations last week with potential gas
customers in European end markets.
"We're pleased by how they're going," Cook said, saying that
early indications of demand were four times as much as potential
supply, although he cautioned that it was still early.
"We need to understand how those initial offers translate
into firm contracts." he said.
Cook did not rule out that both Nabucco West and TAP could
be built in the long term.
Asked whether BP felt any political pressure to select TAP,
with its promise of inward investment for crisis-struck Greece
and Italy, Cook said any such pressure was "not obvious".
"We certainly know that it's a consideration for others," he
said. "If that turns into great support for doing the projects,
then that's wonderful. But we try to make sure that we make the
comparison as objective as possible."
In addition to the Shah Deniz consortium, which has a 50
percent equity option on both projects, TAP's shareholders are
Swiss group Axpo Holding, which has 42.5 percent,
Statoil (42.5 percent) and E.ON Ruhrgas (15 percent).
Nabucco's other six shareholders are Austria's OMV
, RWE, Hungary's MOL, Turkey's
Botas, BEH of Bulgaria and Romania's Transgaz.
BP's own equity options, which are part of the Shah Deniz
stakes, are 20 percent in TAP and 14 percent in Nabucco.
The shareholdings in Nabucco in particular are still fluid,
and critics say delays, possible cost overshoots and rival
pipelines make the Nabucco project increasingly unattractive.
RWE is in talks to sell its Nabucco stake to OMV, while
Germany's Bayerngas, which had been planning to join the
consortium, said on Monday it had abandoned such plans and was
shifting its focus to its home market.
Cook said he was not unduly worried about some changes among
the shareholders. "Obviously, we want to understand the
governance structure of Nabucco," he said. "On the other hand,
we weren't overly concerned about RWE."
He added that BP was not actively seeking to increase its
stake in either project.