Rival bids submitted to export Azerbaijani gas

Mon 03 October 2011 13:31 GMT | 18:31 Local Time

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The Shah Deniz Consortium has received three bids to export 10 million cubic metres of gas per year to Europe, a BP spokeswoman has confirmed.

The bids have as expected come from the Nabucco, Trans Adriatic Pipeline and IGI-Poseidon (ITGI) projects.

The consortium has already started to evaluate the bids, BP-Azerbaijan spokeswoman Tamam Bayatli told Gun.Az on Monday.

BP is a member of the Shah Deniz consortium and operator of the Shah Deniz field. The other consortium members are Azerbaijan's state oil company SOCAR and Norway's Statoil.

The BP spokeswoman told ANS-Press that the consortium would assess the bids in accordance with the eight criteria announced earlier.

A main criterion is that the gas pipeline has to be able to ship 10 billion cubic metres of gas at the initial stage and to have the capacity to expand as output increases from Shah Deniz II, Bayatli said.

Other factors include commercial and financial viability, engineering and design, transparency and security.

The consortium is also considering a fourth option, the spokeswoman said.

This is to build its own pipeline through south-east Europe. BP put forward the South-East Europe Pipeline proposal at the 11th hour in the bidding process, in frustration at the other bidders' expected failure to adapt their own proposals to meet the consortium's needs.


Nabucco Gas Pipeline International GmbH has described their bid as comprehensive.

Reinhard Mitschek, Nabucco's managing director, was not surprisingly upbeat about the chances for his ambitious project, APA reported.

"We are confident that Nabucco offers the best export route for gas from Azerbaijan and from other sources. Nabucco is the European flagship project of the South East European Gas Corridor. It is commercially viable and competitive. Political support and stability has been granted by a treaty with a duration of 50 years signed by all five transit countries as well as by bilateral project support agreements. Nabucco offers a win-win situation for suppliers and transportation customers," Mitschek said.

Nabucco is the largest of the projects bidding to export Azerbaijani gas. The gas would be pumped via Georgia and Turkey and then on through Bulgaria, Romania and Hungary to the Baumgarten gas hub in Austria.

The cost of the 3,900-km pipeline was assessed at $11.4 billion in 2005. The consortium dismissed reports earlier this year that the cost had risen to $18-22bn, but acknowledged that costs were under review.

The pipeline will have a throughput capacity of 31 billion cubic metres of gas per year, a volume that will not be met by Shah Deniz II alone. Other fields in Azerbaijan may be able to supply the pipeline, while the Nabucco project is also seeking gas from Turkmenistan, via a proposed Trans-Caspian pipeline, and from the Middle East.

The Nabucco project is backed by the European Commission and received a further boost last week when Bayerngas, an Austro-German publicly owned gas procurement company, announced its intention to join the shareholders. The existing Nabucco shareholders are OMV (Austria), MOL (Hungary), Transgaz (Romania), Bulgarian Energy Holding (Bulgaria), Botas (Turkey) and RWE (Germany).

IGI-Poseidon (ITGI)

The Interconnector Italy-Greece has yet to make an official statement about its bid.

IGI-Poseidon is backed by Italian energy company Edison and DEPA of Greece.

The pipeline will be smaller than Nabucco with an initial capacity of 10bn cubic metres per year and 20bn cu.m by 2017, when Shah Deniz II will come on stream.

As part of the ITGI project, the Turkish grid will be upgraded to cope with the volume of gas in transit to Italy and Greece. The gas will be pumped through the existing Interconnector Turkey-Greece and onwards through a new pipeline linking Greece and Italy which includes an onshore section in Greece and offshore section across the Ionian Sea.


The 520-km Trans-Adriatic Pipeline (TAP) will pump gas via Turkey, Greece, Albania and the Adriatic Sea to Italy.

The Trans Adriatic Pipeline project comprises Switzerland's EGL (42.5%), Norway's Statoil (42.5%), itself a member of the Shah Deniz Consortium. and Germany's E.ON Ruhrgas (15%).

The consortium developing the Shah Deniz field will make its decision on the export bids by the end of the year, the BP spokeswoman said.


See Also

Nabucco welcomes Bayerngas’ intent to become new shareholder

Greek company pushes ITGI gas pipeline route

Azerbaijan keen to get going on gas supplies to Europe

Shah Deniz consortium to define route of gas exports to Europe by year end

Trans Adriatic Pipeline exec upbeat on chances



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