Nabucco Pipeline to Compete for Rights to Ship Gas from Shah Deniz Field to Europe

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Progress has been made on the Nabucco West Pipeline, with the Nabucco Consortium winning a key stage in the tendering process, outbidding the BP plc (NYSE:BP) (London, England)-backed South East Europe Pipeline (SEEP) in a prequalification stage. BP decided to drop its SEEP project to encourage the Nabucco West Pipeline project, putting it in competition with the Trans-Adriatic Pipeline. The company has a stake of 25.5% in the Shah Deniz II consortium, which operates a gas field called Shah Deniz in the Caspian Sea, along with Statoil ASA (NYSE:STO) (Stavanger, Norway) and Azerbaijan's State Oil Company (SOCAR).

The 1,300-kilometer Nabucco West pipeline will compete with the Trans-Adriatic Pipeline for the rights to export natural gas from the Shah Deniz field. According to the Azerbaijan government, the Shah Deniz field may hold 1.2 trillion cubic meters of the fuel in Azeri part of the Caspian.

Nabucco, in a statement, confirmed that the BP consortium announced that it chose the scaled-down pipeline as its option to deliver natural gas through Europe. Nabucco Managing Director Reinhardt Mitschek described the decision as "a milestone."

"Nabucco delivers freedom of choice to gas consumers and will contribute considerably to the security of supply in Europe," he said in a statement. "This decision is an important milestone for the Nabucco project and a major step toward the final investment decision."

Nabucco West now faces competition only from the Trans-Adriatic Pipeline, which won the prequalification round against the Interconnector Turkey Greece Italy (ITGI) pipeline. The Shah Deniz II consortium plans to announce a decision on which route it will use by mid-2013.

On June 26, Turkey and Azerbaijan signed an inter-governmental agreement to provide a vital connection in the form of the $7 billion Trans-Anatolian Natural Gas Pipeline Project (TANAP), planned to carry Azeri natural gas across Turkey to the edge of Europe. This project will be a complementary part of the Nabucco West Pipeline.

The Nabucco Pipeline is the name of a project that would supply gas to Europe, reducing the European Union's (EU) dependence on Russian natural gas. The EU-backed project has long been delayed, a result of high costs and not enough gas to supply pipeline. Also, Russia is pressing for a competing pipeline--South Stream--via its gas monopoly OAO Gazprom (Moscow, Russia), which partners with energy company Eni SpA (Rome, Italy).

Recently, the Nabucco Consortium revised the original pipeline project and scaled it down to begin from Turkey's Bulgarian border. The revised pipeline, named Nabucco West, would have capacity of 10 billion cubic meters of gas yearly (the original project capacity was 31 billion cubic meters), with 1 billion cubic meters going to Bulgaria; 1 billion to 2 billion cubic meters to Romania; 2 billion cubic meters to Hungary; and 5 billion to 6 billion cubic meters to Germany and other European countries.

The Nabucco Consortium is a joint venture of utility firm RWE AG (OTC:RWEOY) (Essen, Germany), petroleum firm OMV AG (PINK:OMVKY) (Vienna, Austria), petroleum firm Mol Nyrt (PINK:MGYOY) (Budapest, Hungary), utility firms Bulgargaz EAD (Sofia, Bulgaria) and Transgaz S.A. (Bucuresti, Romania), and gas distribution firm Boru Hatlari ile Petrol Tasima AS (Ankara, Turkey) (BOTAS). The Trans-Adriatic Pipeline is planned by utility firm EGL AG (Dietikon, Switzerland), Statoil and Austrian petroleum products distribution firm EON Ruhrgas AG (Vienna, Austria).

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.