There's more than enough natural gas to fill the Nabucco pipeline that is expected to transport gas from the Caspian and Middle Eastern regions to Austria through Turkey, and the consortium isn't considering downsizing the project, one of the venture's partners said.
There's more than enough natural gas to fill the Nabucco pipeline that
is expected to transport gas from the Caspian and Middle Eastern regions to
Austria through Turkey, and the consortium isn't considering downsizing the
project, one of the venture's partners said.
"We're talking about an excess of 80 billion cubic meters per year from
Azerbaijan, Turkmenistan and Iraq," the Nabucco pipeline's most likely
initial supplier countries, Jeremy Ellis, head of business development at RWE
AG's (RWE.XE) Supply and Trading unit, told Dow Jones Newswires in an interview
late Tuesday.
"
Egypt
has
also recently expressed publicly an interest to participate," Ellis added.
His comments come in response to recent statements by BP PLC's (BP) official
Iain
Conn
, who
said at a conference last month that the
U.K.
oil
major prefers smaller pipelines to the 31 bcm Nabucco project due to a lack of
gas in the Caspian region.
"The question raised by BP that there isn't enough gas to fill a pipeline
the size of Nabucco is fundamentally wrong," said RWE's Ellis.
He added that Nabucco's challenge isn't availability of gas but aligning the
timing of gas supply interests from various potential producing countries.
Nabucco seeks to secure gas supplies from
Azerbaijan
,
Turkmenistan
and
Iraq
and
talks with producers there are ongoing, Ellis said.
One possible source for Nabucco is BP and Statoil ASA (STO) led Shah Deniz II,
the second development stage of an offshore gas field in
Azerbaijan
. But
that particular gas field isn't expected to produce gas before 2017 and
Azerbaijan
has
guaranteed only 10 bcm for export from that source, not enough to fill Nabucco.
Additionally Nabucco is competing for Shah Deniz II gas with at least two other
pipeline projects--the Trans Adriatic Pipeline and the Interconnector Turkey
Greece Italy, known as ITGI.
Further complicating things for Nabucco is that largescale exports from
Iraq
and
Turkmenistan
are
unlikely in the near term, said Jennifer Cooldige, executive director CMX
Caspian and Gulf Consultants.
Iraq
's
focus is firmly pegged on re-electrifying the country and
Turkmenistan
still
lacks the gas export infrastructure and "the ability to produce the
incremental gas needed to supply
Europe
",
Coolidge said.
With large scale supplies from
Iraq
and
Turkmenistan
unlikely in the near term, "Nabucco and the relevant gas buyers will be
forced to quote transit tariffs to
Azerbaijan
's gas
company SOCAR dependent on the level of risk the consortium and the gas buyers
are willing to take," she added.
However, Ellis remains confident, saying that the "first gas from Nabucco
will likely be in 2017, driven predominantly by the start of production of Shah
Deniz II."
He added that talks with
Turkmenistan
and
Iraq
are
also proceeding and both countries are "working hard towards a timetable
to supply gas between 2017 and 2020".
Ellis also said that Nabucco has offered to extend Nabucco to the Azeri capital
of
Baku
.
Connecting
Baku
to
Nabucco could help "lessen complexity and further increase economies of
scale", he said. It would also provide
Azerbaijan
and
Turkmenistan
with
flexibility for growth in its upstream sector and provide increased diversity
for exporting Caspian gas, he added.
"We're still waiting for feedback on our proposal from the Shah Deniz II
consortium," he said.
Ellis also said that RWE is still "supportive" of a merger between
Nabucco and Edison SpA (EDN.MI) led ITGI, which the European Commission has
publicly advocated in recent months.
"We think it would make sense for ITGI to use Nabucco to transport gas to
their markets. The benefits of such a merger need to be seen by
Edison
,"
Ellis said.
Apart from RWE the Nabucco consortium consists of
Austria
's OMV
AG (OMV.VI),
Romania
's
Transgaz
,
Turkey
's
Botas
,
Bulgaria
's
Bulgargaz and
Hungary
's MOL
Nyrt. (MOL.BU).
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