The fate of the giant Nabuccco pipeline, a proposed 31-billion cubic feet per year gas supply line linking the Caspian to Austria by traversing the heart of Turkey proposed in 2002, may hinge on Azerbaijan, according to a Wall Street Journal report.
The Azerbaijani state-backed oil company SOCAR is scheduled to throw in its casting vote on how to narket the gas from the country’s mammoth BP-operated trillion cubic meter Shah Deniz II offshore gas field by the end of the year.Â
The pipeline – the central aim of which is to dramatically remove Europe’s reliance on Russia for the supply and transit of natural gas – is heavily back by the European Union, though it’s success is contingent on finding a combination of suppliers willing to commit to supplying Europe for the long term.
The main challenge is the size of the proposed pipeline. “We don’t want to have a deal to pay for capacity we don’t need,” Elshad Nassirov, vice president of SOCAR said in an interview to the Wall Street Journal, which reports that BP, the operator of Shah Deniz, has expressed a similar view. The preference is instead for a smaller pipeline for the time being.
While SOCAR is keen to supply Europe – where prices are high – the Shah Deniz production will only one-third fill the Nabucco line, making transport costs unattractive. One solution is for multiple suppliers to feed into the pipeline, including from Kazakhstan and Turkmenistan via the proposed seabed Trans Caspian pipeline.
However, such a project is concertedly opposed by Russia and Iran, and requires a greater degree of co-operation between Caspian states than has so far been possible. Turkmenistan has previously promised to contribute to the Nabucco line, though have resisted calls to be tied to a supply agreement, in part due to Russian pressure on current Turkmen gas import arrangements.
Turkmen explorer Dragon Oil hase been tied up in negotiations with the Turkmen government for years on the monetization of it’s associated gas from the Cheleken Contract Area.
