* Two pipeline projects left in the race
* Decision on full route not expected until next year
* TAP contends for southern route; Nabucco West for northern
* Energy Commissioner welcomes step closer to more security
(Adds SOCAR statement)
By Oleg Vukmanovic and Barbara Lewis
LONDON/BRUSSELS, June 28 Azerbaijan's Shah Deniz
II consortium, led by BP Plc and Statoil,
selected the Nabucco West pipeline for one of two possible
routes to carry Caspian gas to western Europe, BP said on
The decision is part of a long process of elimination to
choose a new pipeline to break Russia's dominance of the
European Union natural gas market.
"The Nabucco West project, with a route running from the
Turkish-Bulgarian border to Baumgarten (in Austria), has been
selected," BP said in a statement.
"Development of the South East Europe Pipeline (SEEP)
project (led by BP), which had been assembled by Shah Deniz
partners in collaboration with Bulgaria, Romania and Hungary,
will cease," it added.
Graphic of Nabucco: link.reuters.com/kep53s
In February, the Trans-Adriatic Pipeline (TAP) was picked
for a possible southern route, beating off competition from
another rival, ITGI.
Next year, Shah Deniz II is expected to decide on the entire
route for its gas and whether it wants the last stage of the
journey to take a southern route through Italy or a more
northern route into Austria.
Nabucco West hailed Thursday's decision as progress towards
diversifying Europe's gas supplies and making them more secure.
"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 Gas Pipeline
International said in a statement.
EU Energy Commissioner Guenther Oettinger also welcomed the
"With this pre-selection, we are a step closer to getting
gas directly from Azerbaijan and other countries in the Caspian
region. Whatever the final decision on the whole route from the
eastern part of Turkey to Europe, Azerbaijani gas is certain to
come to Europe," Oettinger said in a statement.
"This is a success for Europe and for our security of
The Commission was long regarded as a supporter of a grander
Nabucco "classic" project to carry gas all the way across Turkey
and then into Europe.
The Commission has said that project is still under
consideration as a route for connecting up to the shorter
Nabucco West, although industry sources have questioned the
commercial viability of the larger project.
Thursday's announcement follows an inter-governmental
agreement between Turkey and Azerbaijan on Tuesday, providing a
vital connection in the form of the $7 billion Trans-Anatolian
pipeline (TANAP), planned to carry Azeri natural gas across
Turkey to the edge of Europe.
In any event, the Commission says it is neutral on which
pipeline should win, provided it helps to diversify Europe's gas
suppliers, that the winning project can be scaled up according
to demand and that robust legal agreements underpin it.
Azeri gas fields are the most developed new non-Russian
sources of natural gas that can be pumped to the European Union
The Shah Deniz II partners said they will work with the
developers of Nabucco West and TAP to ensure the projects can be
developed and delivered before production from the second phase
of Shah Deniz comes onstream in 2017, BP said.
Shah Deniz II is set to add a further 16 billion cubic
metres (bcm) a year to the 9 bcm/year from Shah Deniz I.
The European Union's desire to find alternative suppliers to
Russia, which provides around a quarter of its gas, deepened
after supply disruptions in 2006 and 2009 because of tension
between Russia and transit state Ukraine.
Gazprom also restricted shipments to western
Europe in January after exceptionally cold weather led to a
surge in domestic demand.
TAP, whose partners are Statoil, Swiss EGL and
Germany's E.ON Ruhrgas, says it is well-placed to
fulfil the EU's criteria of ensuring reliable supplies. It said
it could also ease the financial problems of Greece and Italy -
nations it would travel through, providing hundreds of jobs.
"We believe that its clear economic, commercial, technical
and strategic advantages make TAP the strongest contender in
this competition and the best option for both Europe and
Azerbaijan," TAP Managing Director Kjetil Tungland said.
BP operates the Shah Deniz II gas field, which is thought to
contain 1.2 trillion cubic metres of gas and holds a 25.5
percent stake, as does Statoil. The rest is divided
between Azerbaijan state oil company SOCAR, Russian LUKOIL
, NICO, Total SA and TPAO.
Elshad Nassirov, vice-president of SOCAR, said in a
statement that neither of the two remaining options from Turkey
was "the preferred option." Both would be assessed on
commercial, financial and reliability criteria, as well as on
the support of host governments.
He added the final decision was expected for June next year,
but SOCAR would try to decide earlier if possible.
Nabucco's six shareholders are Austria's OMV AG,
Germany's RWE AG, Hungary's MOL through its
gas pipeline operator FGSZ, Turkey's Botas, BEH of Bulgaria and
(Editing by William Hardy, Rex Merrifield and Andre Grenon)