* Azerbajan, Russia in rivalry over European gas market
* Shah Deniz II to suppy 16 bcm of gas a year from 2019
By Lada Evgrashina
BAKU, Sept 19 Azerbaijan signed contracts on
Thursday to supply European buyers with gas, offering an
alternative supply source to Russia towards the end of the
Moscow has increased its diplomatic efforts to bring oil and
gas rich Azerbaijan closer to its orbit as Russian President
Vladimir Putin has been keen to restore influence over former
However, his trip to Azerbaijan last month yielded few
results, dashing Moscow's hopes of challenging the dominance of
Western energy majors there.
Earlier this year, Azeri state oil company SOCAR and
partners including BP and Statoil selected the
Trans Adriatic Pipeline (TAP) for potential gas deliveries to
Europe, following more than a decade of planning, dealing a blow
for Russia's aspiration for tighter control over gas routes.
SOCAR said on Thursday that buyers of Azeri gas from its
Shah Deniz II project are Shell, Bulgargas, Gas Natural
Fenosa, Greek DEPA, Germany's E.ON, French GDF Suez
, Italian regional utility Hera Trading, Swiss
AXPO and Italian Enel.
"It is a ground-breaking contract as it secures supplies to
Europe from a new supply region for decades at conditions
reflecting European gas markets," Christopher Delbruck, the
newly appointed CEO of E.ON Global Commodities SE, said in a
He added that E.ON's contract with SOCAR spans 25 years
during which the company will get 40 billion cubic metres (bcm)
European buyers have struggled to find alternatives to
Russia's gas producer Gazprom, whose contracts link
prices to oil, generally making it expensive compared to the
Gazprom covers a quarter of Europe's gas needs with over 150
bcm of its exports a year. In response to Europe's quest for
Caspian supply Gazprom proposed its $39 billion South Stream
project which would pipe gas to northeast Italy through the
Black Sea starting from the end of 2015
ITALY TO GET LION SHARE
Shah Deniz is expected from around 2019 to feed 16 bcm of
gas per year to Europe, with 10 bcm earmarked for Europe and 6
bcm for Turkey.
Half of the gas is destined for Italy, a SOCAR official
"Around 8 billion cubic metres of gas will be shipped to the
Italian market, where European buyers will be getting it for
their facilities in the country (Italy)," Elshad Nasirov,
SOCAR's vice president, told reporters.
Two years ago, the consortium expected around 40 bcm per
year of demand for its gas, but more realistic buyer demands had
reduced the figure, BP's Vice President of Shah Deniz
Development, Al Cook, told Reuters in March.
SOCAR will act as an operator of sales from Shah Deniz II.
Statoil is an sale operator from Shah Deniz I.