Nabucco West in pipeline 'final'
By Robert M Cutler
MONTREAL - The long-running saga of how
Azerbaijan's natural gas will get to Europe
recently reached a milestone, when the consortium
of companies developing the second phase of the
offshore Shah Deniz deposit (Shah Deniz Two)
narrowed its choice of possible export routes to
two.
It selected the "Nabucco West"
pipeline, a revised version of the original
Nabucco pipeline, as against the last-minute South
East Europe Pipeline (SEEP) proposal submitted by
the UK-based energy company BP.
The
offshore Shah Deniz gas field was discovered in
1999. The exploration and development consortium
is operated by BP
(United Kingdom), which
has a 25.5% stake. Statoil (Norway) also holds
25.5% of the consortium. The other partners are
LukAgip (Russia, a joint venture of Eni and
Lukoil), NIOC (Iran), SOCAR (Azerbaijan), and
Total (France), each with 10%; and TPAO (Turkey)
with 9%. Shah Deniz One began producing gas in
late 2006. Current timelines see Shah Deniz Two
coming online in late 2017 or early 2018.
The consortium's plan all along has been
to choose one of two possible "western" (ie
Southern European) routes to Italy, then between
one of two possible "northern" (ie Southeastern
and Central European) routes to Austria, and then
between those two finalists. Perhaps a bit
confusingly, the northern-route candidate is now
Nabucco West.
Despite the geographical
nomenclature of the various European regions
through which they pass, the two overall
possibilities are usually called, respectively,
the "western" route (to Italy) and "northern"
route (to Austria), because the point of reference
is the Turkish border with Greece and Bulgaria,
where the gas would cross over into territory of a
European Union member state.
In February,
the Shah Deniz consortium indicated a preference
for the Trans-Adriatic Pipeline (TAP) over the
Interconnector Greece-Turkey-Italy (ITGI) as the
western-route candidate for final decision.
The TAP proposes to take 10 billion cubic
meters per year (bcm/y) of natural gas across
Greece and Albania, then going underneath the
Adriatic Sea to the heel of Italy's boot. Its
proponents say that this quantity could later be
doubled. The TAP consortium comprises E.ON
(Germany) with 15%, EGL (Switzerland) with 42.5%,
and Statoil (Norway) also with 42.5%.
Preparations for some form of the Nabucco
natural gas pipeline, originally conceived to run
3,893 kilometers from the Georgian-Turkish border
to Baumgarten in Austria, began a decade ago. The
Nabucco West pipeline is so called because it is
essentially the western part of the Nabucco
pipeline as originally proposed. Partners in the
project include Botas (Turkey), Bulgarian Energy
Holding (Bulgaria), FGSZ (Hungary), OMV (Austria),
RWE (Germany), and Transgaz (Romania).
In
the Nabucco West scenario, the pipeline begins
instead at the Bulgarian-Turkish border and runs
1,312 kilometers to Baumgarten, carrying 10 bcm/y.
The segment of Nabucco traversing Turkey was made
unnecessary when Azerbaijan and Turkey agreed late
last year to build the Trans-Anatolian Gas
Pipeline (TAGP or TANAP after its initials in
Turkish, so as not to be confused with the
Trans-Adriatic Pipeline).
A memorandum of
understanding between the two governments was
signed last December, and the full
intergovernmental agreement was signed just last
week. The TAGP's exact route has not been laid
out, but it will run approximately 2,000 km.
Shareholders include SOCAR (Azerbaijan) with 80%,
BOTAS (Turkey) with 10%, and TPAO (Turkey) also
with 10%.
The TAGP will in the first
instance carry 6 bcm/y of gas from Shah Deniz One
for Turkish domestic consumption and 10 bcm/y of
gas from Shah Deniz Two for re-export to Europe
through either TAP or Nabucco West.
The
pipeline would be scalable upwards to accommodate
additional gas from Azerbaijan or from other
originally planned Nabucco sources such as Iraq
and Turkmenistan. Current projections foresee the
possibility of expanding the throughput to 23
bcm/y by 2023 and 31 bcm/y by 2026, with a
feasible final stage of 60 bcm/y in the indefinite
future.
The selection of Nabucco West as
the second finalist for Shah Deniz gas is another
step on the road to realizing the Southern Gas
Corridor (SGC), a European Commission initiative
adopted in 2009. The SGC was a bundle of projects
designed to decrease the EU's overreliance on gas
imports from Russia, in the wake of winter gas
cutoffs in January 2006 and January 2009.
Moscow nevertheless has been able to
construct the Nord Stream pipeline under the
Baltic Sea directly from Russia to Germany. A
factor in this success is generally believed to
have been its co-opting of former German
chancellor Gerhard Schroeder, who was brought on
board to the project literally days after he left
the government that had successfully lobbied
Brussels for its approval.
Nord Stream's
second parallel line is scheduled to bring
throughput up to 55 bcm/y. In addition, Russia has
been strongly lobbying for its long-touted South
Stream project under the Black Sea. Despite a
number of bureaucratic successes, the latter has
lately run into political trouble.
Indeed,
it is still not clear whether South Stream would
make landfall in Bulgaria or in Romania. The two
overland forks of South Stream, one across Greece
to Italy and the other through the Balkans to
Central Europe, would supposedly carry 63 bcm/y
together.
Dr Robert M Cutler
(http://www.robertcutler.org),
educated at the Massachusetts Institute of
Technology and The University of Michigan, has
researched and taught at universities in the
United States, Canada, France, Switzerland, and
Russia. Now senior research fellow in the
Institute of European, Russian and Eurasian
Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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