(EnergyAsia, June 29 2012, Friday) — The Shah Deniz consortium, led by UK’s BP and Norway’s Statoil, has concluded its evaluation of potential gas export routes towards Southeastern and Central Europe.
In a statement, the consortium operator BP said the Nabucco West project with a route running from the Turkish-Bulgarian border to Baumgarten has been selected as the single pipeline option for the potential export of Shah Deniz Stage 2 gas to Central Europe.
Development of the South East Europe Pipeline (SEEP) project, which had been assembled by Shah Deniz partners in collaboration with Bulgaria, Romania and Hungary, will cease. This decision was made on the basis of the publicly communicated selection criteria announced last year.
In particular, BP said the greater maturity of Nabucco West gave the consortium confidence that this project could be developed and delivered on the same timeline as Stage 2.
The Shah Deniz Stage 2 project aims to deliver gas from the Caspian Sea to markets in Turkey and Europe, opening up the “Southern Gas Corridor”. The progress made to date allows the consortium to maintain its target for first gas exports from Stage 2 project around the end of 2017.
BP said the consortium will cooperate with the Nabucco West project to optimise its scope, its technical studies and its commercial offer.
Based on the same criteria, in February this year the consortium selected the Trans-Adriatic Pipeline (TAP) as the potential route for export of Stage 2 gas to Italy. Since that decision, the Shah Deniz consortium has closely worked with TAP, recently concluding a co-operation agreement with this project.
BP and Statoil each have a 25.5% stake in the consortium developing the Shah Deniz II gas field, which is thought to hold 1.2 trillion cubic metres of gas. Their partners include Azerbaijan state oil company SOCAR, Russia’s LukOil, NICO, Total SA and TPAO.
BP said the consortium will continue to work with the owners of the two selected pipeline options. It will make a final decision between these projects, and will conclude related gas sales agreements ahead of the final investment decision due in mid-2013.
Shah Deniz II is expected to add 16 billion cubic meters per year (bcm/year) of gas production to the approximately 9 bcm/year from Shah Deniz Stage 1.
The latest development, located 70 km offshore in the Azerbaijan sector of the Caspian Sea, is expected to include two new bridge-linked production platforms, 26 subsea wells to be drilled with 2 semi-submersible rigs, 500 km of subsea pipelines built at up to 550m of water depth, a 16 bcm/year upgrade for the South Caucasus Pipeline (SCP), and expansion of the Sangachal Terminal.
Rashid Javanshir, President of the BP Azerbaijan, Georgia and Turkey Region, said:
“We are delighted to announce the selection of the Nabucco West option, alongside our earlier selection of TAP.
This represents another important milestone in the development of Shah Deniz Stage 2 and the transportation of gas resources from the Caspian to Europe.
“We are grateful to the governments and companies who have supported the development of both the Nabucco West and SEEP pipeline projects.”
Rovnag Abdullayev, President of SOCAR, said:
“This decision constitutes a significant step towards implementation of the Southern Gas Corridor Strategy which would serve the strategic interest for sustained energy security of European countries as well as Azerbaijan, Georgia and Turkey.
“This indicates the growing role of Azerbaijan as an enabler to provide diversified energy resources to European market.”
BP said the consortium will consider building more pipeline capacity to deliver Shah Deniz gas through Turkey and Europe. Any export route selected for export of Shah Deniz Stage 2 gas would need to have the ability to meet all relevant environmental, safety, social, legal and regulatory standards.