* Nabucco West pipeline competes against TAP project for Azeri gas
* Azeri group says stake in Nabucco West key for it to be picked
* Nabucco project had to downsize to stay in competition (Adds details, background)
By Tsvetelia Tsolova
SOFIA, Dec 20 Azerbaijan's Shah Deniz II gas group could agree to take over a 50 percent stake in the Nabucco pipeline consortium by January, boosting Nabucco's prospects in a competition between projects that aim to pipe Azeri gas into Europe.
Nabucco stakeholder Bulgarian Energy Holding (BEH) said on Thursday that talks were advanced and that he hoped a deal could be sealed on Jan. 10 at a Nabucco shareholders meeting in Sofia.
"We are holding talks almost every day. We expect Shah Deniz to acquire 50 percent of the shares in the Nabucco consortium," Mikhail Andonov, head of BEH, told reporters.
The Shah Deniz II consortium has already signed a funding deal with Nabucco's rival, the Trans-Adriatic pipeline (TAP) pipeline, which aims to pumpt the gas to Italy.
Shah Deniz II has said that Nabucco would have to hand over a significant stake in the project in order to stay in the race.
"There are two semi-finals for the Azeri gas. Such a deal will boost significantly the prospects for Nabucco," BEH's Andonov said.
A Nabucco spokesman declined to comment.
The Nabucco gas pipeline project was initially designed to transport an annual capacity of 32 billion cubic metres of Azeri and other central Asian gas through Turkey and southeastern Europe into Austria.
But its high costs and a lack of gas suppliers beyond the 16 bcm Shah Deniz II consortium led to the project being downsized and shortened.
The new Nabucco West project now aims to ship 16 bcm of gas from the Turkish border to Austria, leaving the transit through Turkey to the joint Azeri-Turkish TANAP pipeline.
The European Union supports the delivery of Azeri gas to the region, which is expected to start in 2018 regardless of the pipeline chosen, to reduce its dependency on Russian gas imports.
Andonov said the 50 percent stake under discussion with the artners in Shah-Deniz II - BP, Statoil, Azeri state firm SOCAR and Total - would not give them control over Nabucco, where decisions require a two-thirds majority.
He declined to elaborate on the value of the deal.
Along with BEH, shareholders in Nabucco include Austrian energy group OMV, Hungary's MOL through its gas pipeline operator FGSZ, Turkey's Botas, and Romania's Transgaz.
German utility RWE is currently holding talks to sell its stake in Nabucco to OMV. (Additional reporting by Henning Gloystein in London; editing by Jane Baird)