BP drops SEEP to back Nabucco West

BP has chosen Nabucco West as its second export line option to bring gas from Shah Deniz 2 to Europe, axing its own South East Europe Pipeline (SEEP) proposals and narrowing the field to two pipelines.

The 1300-kilometre, 48-inch Nabucco West pipeline would run from the Turkish-Bulgarian border through Bulgaria, Romania and Hungary to Baumgarten, Austria.

The BP-led Shah Deniz consortium will now work with Nabucco West on optimising the scope, conducting technical studies and shaping its commercial offering.

Nabucco Gas Pipeline International managing director Reinhard Mitschek said the move was “an important milestone for the Nabucco project and a major step towards the final investment decision” for the European pipeline.

The Nabucco project has been cast into doubt in recent months by a simmering costs row which prompted Hungary to threaten to quit the project and RWE to place its participation under review.

In February, the Shah Deniz consortium selected the Trans-Adriatic Pipeline (TAP) as the first potential route for export of Stage 2 gas to Italy, and has since concluded a co-operation agreement on the project.

The group rejected at that stage the ITGI (Interconnector-Turkey-Greece-Italy) option, whose backers included Greek gas company Depa and Italy’s Edison.

The consortium has said it will now work with both Nabucco West and TAP before making a final decision between the pair – as well as inking related gas sales agreements – ahead of a final investment decision on Shah Deniz 2 slated for mid-2013.

TAP managing director Kjetil Tungland said he welcomed the consortium’s move to “clear the way for the ultimate decision” between the two remaining contenders.

Tungland insisted his project was the “best option for both Europe and Azerbaijan,” arguing it was “the most advanced, especially in terms of financing and permitting”.

Explaining its decision, the consortium said that “in particular, the greater maturity of Nabucco West gave the consortium confidence that this project could be developed and delivered on the same timeline as Stage 2”.

“Development of the SEEP project, which had been assembled by Shah Deniz partners in collaboration with Bulgaria, Romania and Hungary, will cease,” the British supermajor said on Thursday.

The consortium said both the selection of Nabucco West and of TAP were made based on criteria publicly announced in 2011.

Earlier this week, Azerbaijan and Turkey signed an inter-governmental agreement on the Trans-Anatolian gas pipeline project (TANAP), which they agreed last December to build to take Azeri gas across Turkey to Europe.

Shah Deniz 2 is expected to add a further 16 billion cubic metres per year of gas production to the 9-billion cubic metre yield from the first phase.

The large-scale project aims to bring gas from the Caspian Sea to Turkey and Europe, with first gas exports targeted for the end of 2017.

The giant development 70 kilometres off Azerbaijan is set to include two new bridge-linked production platforms to serve 26 subsea wells, as well as 500 kilometres of subsea pipeline at up water depths of up to 550 metres.

Source: Upstream Online


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