Nabucco submits Shah Deniz tariff bid

Oct. 3, 2011 at 6:22 AM
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BAKU, Azerbaijan, Oct. 3 (UPI) -- The Nabucco natural gas pipeline project says it has submitted a tariff bid to the consortium that controls the massive Shah Deniz II field in Azerbaijan.

Nabucco, one of four proposed European pipeline projects vying for access to the Caspian Sea field through a new southern corridor, submitted its transportation proposal before Saturday's deadline, the Azeri News Agency reported.

Reinhard Mitschek, managing director of Nabucco Gas Pipeline International GmbH, issued a statement Saturday confirming the company had submitted a bid to the Shah Deniz consortium.

"We are confident that Nabucco offers the best export route for gas from Azerbaijan and from other sources," the statement said. "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," it continued. "Nabucco offers a win-win situation for suppliers and transportation customers."

Also reportedly submitting a bid was the Italian-Greek ITGI gas pipeline project. The Wall Street Journal quoted an unnamed "person familiar with the situation" who said the offer had been submitted Friday.

Saturday was the deadline for would-be pipeline purveyors to make offers to transport the Caspian natural gas to customers in Europe and Turkey.

Pipeline groups involved in the proposed include Nabucco, ITGI, also known as the Italy-Greece natural gas interconnector, the Trans-Adriatic Pipeline and a recently submitted bid by the British supermajor BP.

The European groups are vying to establish a "southern corridor" alternative to its dependence on Russia for its natural gas supplies. French supermajor Total announced last month that the reserve potential from its latest find in the Shah Deniz field was around 7 trillion cubic feet of natural gas and associated condensates.

The Nabucco pipeline, unlike its competitors, is being designed to handle flows as much 30 billion cubic meters per year, more than the Caspian field can offer, and thus would also have to rely on future suppliers in the Middle East, such as Iraq.

The project, which by some estimates would cost upward of $25 billion, would stretch from the eastern border of Turkey to the gas hub in Baumgarten, Austria, via Bulgaria, Romania and Hungary.

Its shareholders included the Austrian energy company OMV, Hungary's MOL, Romania's Transgaz, the Bulgarian Energy Holding Co., Turkey's Botas and the German energy conglomerate RWE.

Nabucco's hopes got a boost last week when Bayerngas GmbH, a publicly owned German-Austrian gas-procurement firm, began talks to join its roster of shareholders.

Mitschek said the six current shareholders would immediately determine the future share split within the consortium.

"This is a great step forward for Nabucco," he said. "A strong downstream market is an important asset for the pipeline and something that a new shareholder such as Bayerngas will be able to strengthen."

Bayerngas's arrival was meant to "send a strong message to the markets," and presumably to the Shah Deniz consortium, which reportedly has been hesitant to pay for the excess capacity in the Nabucco pipeline.

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