Oil Report

UPDATE 1-Turkmen gas deal for Nabucco seen in months-RWE exec

* Turkmenistan gas deal expected in months

* Sees Azeri gas deal following

* Is not concerned about South Stream

(Adds details, background, quote)

By Melis Senerdem

ISTANBUL March 5 (Reuters) - RWE RWEG.DE expects to seal a deal with Turkmenistan on gas supplies for the EU-backed Nabucco pipeline project in coming months, and a deal with Azerbaijan is seen following, an executive with the German energy firm said on Friday.

Head of Business Development in RWE Supply and Trading Jeremy Ellis said 10 billion cubic metres of gas from Turkmenistan is available for the pipeline, which aims to cut Europe’s dependence on Russian gas. The 31 billion cubic metre capacity Nabucco pipeline aims to bring Caspian and Iraqi gas to European markets, but faces competition from Russia’s planned South Stream pipeline, which unlike Nabucco already has secure gas supplies.

“RWE is looking to secure supply. We are very hopeful to finalize gas supply terms with Turkmenistan in the coming couple of months,” Ellis said.

“We are now expecting that Azerbaijan will have the confidence to move at a pace to secure supplies to transit through Nabucco ... But I suspect it is going to be Turkmenistan then Azerbaijan,” he said.

The Nabucco consortium is trying to secure as much gas as possible from Azerbijan’s Shakh-Deniz II project, which should be producing an annual 13-16 bcm from 2016, he said.

Turkey was the final country to ratify the Nabucco transit agreement late on Thursday, which should ease Nabucco’s efforts to secure funding and supplies for the project.

The Nabucco consortium is made up of Austria's OMV OMVV.VI, Hungarian MOL MOL.BU, Turkey's Botas, Germany's RWE RWEG.DE, Bulgaria's Bulgargaz and Romania's Transgaz TGNM.BX.

The Russian South Stream Pipeline, in addition to having secure gas supplies, is supported by several potential transit countries.

Ellis said he was not concerned by the rival pipeline.

“First, the timetable to bring that project to the market -- it is years behind us. The second point is a significant amount of investment capital, 25 billion euros, is required to construct, in a very technically challenging environment in the Black Sea,” he said.

A substantial portion of South Stream, which aims to bypass Ukraine, will be built under the Black Sea, boosting costs for backers.

Ellis said that between 70-80 percent of the Nabucco pipeline’s 7.9 billion euro cost would be met through financing. (Writing by Thomas Grove)