Caspian gas consortium picks TAP pipeline

Feb. 22, 2012 at 6:30 AM   |   Comments

BAKU, Azerbaijan, Feb. 21 (UPI) -- The consortium controlling Azerbaijan's Shah Deniz II natural gas field this week tapped the proposed Trans-Adriatic Pipeline as a possible route to Europe.

The Caspian Sea consortium, led by the Azerbaijan state-owned oil company SOCAR, indicated Monday it chose the TAP pipeline over a rival proposal should the long-sought Southern Corridor gas route from Azerbaijan to Europe ultimately be placed via Italy, the Trend News Agency reported.

A consortium representative told the Azerbaijani news agency the decision means it prefers to work with the 500-mile Trans-Adriatic Pipeline over the proposed Interconnector Turkey-Greece-Italy.

Negotiations are set to continue with TAP's backers, which include Switzerland's Elektrizitats-Gesellschaft Laufenburg AG, Norway's Statoil and E.ON Ruhrgas of Germany.

Statoil is also one of the members of the Shah Deniz consortium, which hopes to export up to 18 billion cubic meters of gas per year by 2018.

TAP's backers say the pipeline could transport up to 20 billion cubic meters per year of Caspian gas via Greece and Albania, then under the Adriatic Sea to make landfall near San Foca in Italy's Lecce region.

Meanwhile, the ITGI pipeline -- backed by Italian energy company Edison SpA and Greek gas company DEPA -- would skip Albania and place its undersea stretch from Greece's Thesprotia region to Otranto, Italy, about 15 miles south of San Foca.

TAP, however, remains in competition with two other Southern Corridor plans that would bypass Italy.

The Nabucco proposal, backed by Austrian energy company OMV, Hungary's MOL Group, Romania's Tranzgas and others, would run through Turkey via Bulgaria, Romania and Hungary to Austria.

The other remaining competitor is the South East Europe Pipeline, backed by Britain's BP, another Shah Deniz consortium member. It envisions using expanded gas pipeline systems in Turkey and elsewhere to transport Azerbaijani gas to small buyers in Greece, Bulgaria, Serbia, Croatia and others.

An unnamed BP spokesman confirmed to The Wall Street Journal Monday that ITGI had been eliminated as a competitor.

"The SOCAR-led negotiating team has made the decision to undertake exclusive negotiations with TAP on a southern pipeline route through Italy," the spokesman said, meaning ITGI's proposal "will not be considered further."

TAP Managing Parner Kjetil Tungland issued a statement praising his project, saying, "We firmly believe that TAP remains a strong contender to win the bid to transport Shah Deniz II gas to Europe. We are also confident that the TAP route to Italy offers the Shah Deniz consortium the most attractive market and the most advanced evacuation route."

A company official for ITGI partner Edison SpA declined to comment to the Journal.

The apparent choice of TAP over ITGI could have big consequences for Albania, whose prime minister, Sali Berisha, met with Azeri President Ilham Aliyev during an official visit to Baku last week.

Berisha urged SOCAR to participate in the privatization of Albanian state oil company Albpetrol and to help Tirana develop a new distribution infrastructure in the country, the Serbian business news Web site Balkans.com reported.

Berisha also stressed the "vital importance" of the TAP pipeline for the future of Europe's energy security, the Web site said.

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