BP (LON: BP), which operates the Shah Deniz gas field in Azerbaijan, believes the two consortiums currently vying for rights to pipe gas from the Caspian Sea field to markets in Western Europe have roughly equal chances.
A consortium including BP, Statoil (NYSE: STO), SOCAR, and Total (NYSE: TOT) is projected to come to a decision by the middle of this year on whether to direct gas via the Nabucco West pipeline into Austria or the Trans-Adriatic Pipeline project to send the gas into Italy.
Reuters reports:
“I genuinely believe both pipelines at the moment have an equal chance,” said Al Cook, who is in charge of BP’s Azeri operations. “There’s certainly no clear-cut answer at the moment,” he told reporters at a conference in Vienna.
Whichever pipeline project ends up being the final choice, the countries that it runs through stand to benefit hugely.
If the Nabucco pipeline is chosen, then Bulgaria, Hungary, Romania, and Austria would receive billions of investment dollars. If it’s the Trans-Adriatic, then Greece, Albania, and Italy would see a windfall.
At the final stage, the Trans-Anatolian pipeline would link with either of these two pipelines to bring the gas to Europe via Turkey.
The Shah Deniz gas field, Azerbaijan’s biggest, is presently under development by the BP consortium. Some 1.2 trillion cubic feet of gas is estimated to be present in that field, which has been operational since 2006.
Now, the Shah Deniz consortium owns equity options in both the Nabucco West and the Trans-Adriatic projects—BP has 20 percent in the latter and 14 percent in the former.
