The European Union doesn't have any preferences between two natural gas pipeline projects that will import gas from the Caspian in an effort to reduce Russia's stranglehold on E.U. energy supply, Edison SpA (EDN.MI) Chief Executive Umberto Quadrino said Wednesday.
Talks with E.U. Energy Commissioner Andris Piebalgs went "very well" and they were in "total agreement" over the gas pipeline project, Edison's CEO told Dow Jones Newswires in a telephone interview from Brussels after he met Piebalgs.
Italian energy company Edison is working on the Italy Turkey Greece Interconnector, or ITGI, pipeline that will supply the E.U. with gas from the Caspian area via Turkey and Greece. The link will use existing infrastructure.
Edison's CEO said the 11 billion cubic meters of annual supplies for ITGI will come from the second phase of Azerbaijan's Shah Deniz field. The Central Asian country still hasn't decided when it will develop Shah Deniz II.
The offshore pipeline linking Italy and Greece - which needs to be built - is estimated to cost EUR500 million.
Piebalgs said the ITGI project and Nabucco, which also seeks to bring Caspian gas to the E.U. via Turkey to Austria, are equally strategic to the E.U. and there is no preferences between the two, Quadrino said.
ITGI is more likely to be ready ahead of Nabucco as it will use existing Turkish and Greek infrastructure. Nabucco, estimated to cost almost EUR8 billion, needs to build 3,300 kilometers of pipelines and find annual gas supplies of 30 billion cubic meters.
Turkey is seeking to increase its gas take from ITGI as it sees greater internal needs and the sides are discussing this, Quadrino said.
"I am confident a reasonable deal will be reached that is satisfactory to all," Quadrino told Dow Jones Newswires referring to a deal on the transit of the fossil fuel.
Of the 11 billion cubic meters annual supply, about 1.5 billion cubic meters is set aside for Turkey while an equal amount for Greece and the remaining 8 billion cubic meters will be split between Edison and Greek state-owned gas company DEPA.
Edison expects to make a final investment decision on ITGI in 2009, the CEO said.
The E.U. is seeking to diversify its gas sources and supply routes away from Russia, which supplies around 25% of the gas imports for the 27-country bloc.
Western European countries ran short of gas at the start of 2006, when Russia halted supplies via Ukraine over a price dispute. The E.U's top energy official is scheduled to go to Azerbaijan later in November