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UPDATE 3-Shah Deniz consortium selects TAP for Italy pipeline option
February 20, 2012 / 1:40 PM / 6 years ago

UPDATE 3-Shah Deniz consortium selects TAP for Italy pipeline option

* Shah Deniz not to go ahead with ITGI option
    * But TAP lacks intergovernmental agreement, Italian partner
    * Italian, Greek governments remain committed to ITGI
    * Nabucco, SEEP options still open for other routes

 (Adds Italian, Greek gvt. statement, TAP comment)	
    By Henning Gloystein	
    LONDON, Feb 20 (Reuters) - The race between competing
groups to pump Azeri gas to Europe heated up on Monday after the
Shah Deniz II consortium chose the TAP project for a possible
route to Italy, while the Greek and Italian governments remained
committed to the rival ITGI project.	
    Azerbaijan's Shah Deniz II gas field consortium selected the
Trans-Adriatic Pipeline (TAP) project for the route that would
make landfall in Italy, saying it would prefer TAP as its
partner should it decide to send the gas through Turkey to
Italy.	
    "There were originally four options to carry the gas from
Shah Deniz. Now the decision has been taken not to go ahead with
ITGI, so now we're down to three options," a spokesman for BP
 told Reuters on Monday.	
    The European Union, which currently imports around a third
of its gas from Russia, is keen to find new sources of gas in
order to diversify supplies.	
    Azeri gas fields are the most developed new non-Russian
sources of natural gas that can be pumped to the EU through
pipelines.	
    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 SOCAR, LUKOIL, NICO, Total and TPAO.
   	
    But the Italian and Greek governments said on Monday that
they remained committed to the ITGI project.	
    "According to Italy and Greece, talks should go ahead to
explore all alternatives for the opening of the Southern
Corridor, to which the ITGI project can contribute greatly," the
two ministries said in a joint statement.	
    The ITGI (also known as TGI or IGI) project would be an
upgrade and extension of existing gas connections. Italy's
Edison, Greece's government-controlled DEPA and
Turkey's Botas are among ITGI's partners. 	
    Edison also said it would remain committed to ITGI.	
    TAP, whose partners are Statoil, Swiss EGL and
Germany's E.ON Ruhrgas, said it would now move ahead
with negotiations in order to push the project ahead.	
    "We look forward to progressing the TAP project together
with the Shah Deniz Consortium and the Italian, Albanian and
Greek Governments," TAP Managing Director Kjetil Tungland said.	
    TAP has no intergovernmental agreement between the three
countries it would pass through but was included in an agreement
signed in 2009 between Italy and Albania.	
    Critics say that another weakness is its lack of an Italian
partner, without which they say it will be difficult to get
government permission for the project to make landfall in Italy.	
    TAP would run 800 km from Komotini in Greece near the border
with Turkey, through Greece and Albania, to end near San Foca,
Italy.	
    TAP favours using and upgrading Turkey's existing pipeline
network, potentially making it compatible with the
trans-Anatolian gas pipeline project (TANAP) led by Azeri state
oil company SOCAR, which would send Azeri gas through Turkey to
the border with the rest of Europe. 	
    "TAP will be happy to work with the developers of TANAP for
any required coordination between the two pipelines," the TAP
consortium said in January.	
    TAP aims to become operational in 2017 and would carry 10
billion cubic metres (bcm) of Caspian gas a year and be scalable
to a maximum capacity of 20 bcm.    	
  	
    	
    NABUCCO, SEEP STILL IN THE RACE	
    BP said it was also still considering sending the gas to
central Europe instead of to Italy and that the Nabucco and SEEP
pipeline projects were still in the running for that option.	
    A spokesman for the Nabucco consortium said that
"negotiations between the Nabucco shareholders and the Shah
Deniz II consortium are ongoing ... We are confident that
Nabucco submitted the most competitive solution for the southern
corridor."	
    The 4,000 km Nabucco pipeline project would transport over
30 bcm of central Asian gas through Turkey, Bulgaria, Romania
and Hungary into western Europe.	
    It was estimated to cost 7.9 billion euros, but sources say
that could rise as high as 12 billion to 15 billion.
 	
    The Vienna-based consortium's main shareholders are Austrian
energy company OMV, German utility RWE,
Hungary's MOL, Romania's Transgaz,
Bulgaria's Bulgargaz and Turkey's Botas. 	
    Critics say that is too expensive and that there is not
enough non-Russian gas available to fill such a big pipeline.
 	
    RWE has said it will keep all its gas pipeline options open.
  	
    A fourth option (SEEP) would be to deliver gas to
southeastern Europe through existing regional pipelines and
adding new interconnectors, according to BP.	
	
 (additional reporting by Barbara Lewis in Brussels, Angelika
Gruber in Vienna, and Svetlana Kovalyova in Milan, editing by
Jane Baird)

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