* Shah Deniz group would get 50 pct stake
* Funding deal breathes life into downsized Nabucco West
* Rival TAP pipeline has signed similar funding deal
By Tsvetelia Tsolova and Henning Gloystein
SOFIA/LONDON, Jan 10 Azerbaijan's Shah Deniz gas
group has agreed a deal that could see it take a stake in the
Nabucco pipeline to transport the country's gas to Europe,
boosting the project's chances against a rival plan.
The Shah Deniz 2 consortium, which has already signed a
funding deal with the competing Trans-Adriatic pipeline (TAP)
project, has said taking a stake in Nabucco would be critical
for the project to go ahead.
The companies behind the Nabucco pipeline said on Thursday
the deal, announced in Sofia and to be finalised in Vienna,
would give Shah Deniz 2 a 50 percent stake if it chooses their
project as its European export route, in return for joint
funding and development of the pipeline.
"With real upstream people as partners, we move in the
direction of developing more than just something on a paper, but
into direction of a real pipeline," said Gerhard Roiss, chief
executive of Austria's OMV, a shareholder in Nabucco.
Rival TAP plans to pipe Azeri gas to Italy while Nabucco
would transport Caspian supplies to Europe via Austria.
The European Union supports the delivery of Azeri gas to the
region, expected to start in 2018, regardless of which pipeline
is chosen, to reduce its dependency on Russian gas imports.
Analysts said the deal did not come as a surprise and the
Shah Deniz 2 group, whose shareholders include Azerbaijan state
energy firm SOCAR, was trying to boost its bargaining power
ahead of making a decision over which pipeline to choose.
"This move (was) anticipated after the decision of funding
TAP. Shah Deniz 2 partners are making sure they have got some
sort of control over the midstream development, and doing this
before a final decision on which pipeline will go ahead provides
them more leverage," said Massimo Di-Odoardo, senior gas analyst
at energy consultancy Wood Mackenzie.
The Shah Deniz 2 group, which is developing the biggest gas
field in the Caspian Sea region, has narrowed its options over
which route to take for its gas to Europe down to either a
scaled down Nabucco project, known as Nabucco West, or to TAP.
Several other pipeline projects, such as the Interconnector
Turkey-Greece-Italy (ITGI) or the South East Europe Pipeline
(SEEP), have been dropped from the competition.
The Nabucco gas pipeline project was initially designed to
transport an annual capacity of 32 billion cubic metres (bcm) a
year of Azeri and other central Asian gas through Turkey and
southeastern Europe into Austria.
But its high costs and a lack of gas suppliers beyond the 16
bcm Shah Deniz 2 consortium led to the project being downsized
The downsized Nabucco West project aims to ship 16 bcm of
gas a year from the Turkish border to Austria, leaving the
transit through Turkey to the joint Azeri-Turkish TANAP
Should new gas reserves become available in future, Nabucco
West is designed to be scaled back up to 32 bcm, which analysts
say gives it a competitive edge over TAP which, although also
with an option to be grown, would not be able to carry 32 bcm.
"SOCAR's interest is about making sure that the (pipeline)
investments pave the way for future Azeri gas developments. In
this respect Nabucco West, given its scalability, clearly
represents the most attractive option for them," said WoodMac's
Other Nabucco shareholders include Hungary's MOL
through its gas pipeline operator FGSZ, Turkey's Botas,
Romania's Transgaz, Bulgaria's BEH and Germany's RWE
, all holding 16.7 percent stakes.
RWE said last year it would sell its stake, and Roiss said
OMV would buy RWE's share in Nabucco to safeguard the project.
BP holds a 25.5 percent stake in the Shah Deniz
consortium, as does Norway's Statoil. Other
shareholders include France's Total as well as SOCAR.
TAP is being developed by Statoil, Swiss EGL and Germany's