UPDATE: Enough Gas To Fill Nabucco, No Downsizing Pipeline -RWE Executive
April 13 2011 - 9:33AM
Dow Jones News
There's more than enough natural gas to fill the Nabucco
pipeline that is expected to transport gas from the Caspian and
Middle Eastern regions to Austria through Turkey, and the
consortium isn't considering downsizing the project, one of the
venture's partners said.
"We're talking about an excess of 80 billion cubic meters per
year from Azerbaijan, Turkmenistan and Iraq," the Nabucco
pipeline's most likely initial supplier countries, Jeremy Ellis,
head of business development at RWE AG's (RWE.XE) Supply and
Trading unit, told Dow Jones Newswires in an interview late
Tuesday.
"Egypt has also recently expressed publicly an interest to
participate," Ellis added.
His comments come in response to recent statements by BP PLC's
(BP) official Iain Conn, who said at a conference last month that
the U.K. oil major prefers smaller pipelines to the 31 bcm Nabucco
project due to a lack of gas in the Caspian region.
"The question raised by BP that there isn't enough gas to fill a
pipeline the size of Nabucco is fundamentally wrong," said RWE's
Ellis.
He added that Nabucco's challenge isn't availability of gas but
aligning the timing of gas supply interests from various potential
producing countries.
Nabucco seeks to secure gas supplies from Azerbaijan,
Turkmenistan and Iraq and talks with producers there are ongoing,
Ellis said.
One possible source for Nabucco is BP and Statoil ASA (STO) led
Shah Deniz II, the second development stage of an offshore gas
field in Azerbaijan. But that particular gas field isn't expected
to produce gas before 2017 and Azerbaijan has guaranteed only 10
bcm for export from that source, not enough to fill Nabucco.
Additionally Nabucco is competing for Shah Deniz II gas with at
least two other pipeline projects--the Trans Adriatic Pipeline and
the Interconnector Turkey Greece Italy, known as ITGI.
Further complicating things for Nabucco is that largescale
exports from Iraq and Turkmenistan are unlikely in the near term,
said Jennifer Cooldige, executive director CMX Caspian and Gulf
Consultants.
Iraq's focus is firmly pegged on re-electrifying the country and
Turkmenistan still lacks the gas export infrastructure and "the
ability to produce the incremental gas needed to supply Europe",
Coolidge said.
With large scale supplies from Iraq and Turkmenistan unlikely in
the near term, "Nabucco and the relevant gas buyers will be forced
to quote transit tariffs to Azerbaijan's gas company SOCAR
dependent on the level of risk the consortium and the gas buyers
are willing to take," she added.
However, Ellis remains confident, saying that the "first gas
from Nabucco will likely be in 2017, driven predominantly by the
start of production of Shah Deniz II."
He added that talks with Turkmenistan and Iraq are also
proceeding and both countries are "working hard towards a timetable
to supply gas between 2017 and 2020".
Ellis also said that Nabucco has offered to extend Nabucco to
the Azeri capital of Baku.
Connecting Baku to Nabucco could help "lessen complexity and
further increase economies of scale", he said. It would also
provide Azerbaijan and Turkmenistan with flexibility for growth in
its upstream sector and provide increased diversity for exporting
Caspian gas, he added.
"We're still waiting for feedback on our proposal from the Shah
Deniz II consortium," he said.
Ellis also said that RWE is still "supportive" of a merger
between Nabucco and Edison SpA (EDN.MI) led ITGI, which the
European Commission has publicly advocated in recent months.
"We think it would make sense for ITGI to use Nabucco to
transport gas to their markets. The benefits of such a merger need
to be seen by Edison," Ellis said.
Apart from RWE the Nabucco consortium consists of Austria's OMV
AG (OMV.VI), Romania's Transgaz, Turkey's Botas, Bulgaria's
Bulgargaz and Hungary's MOL Nyrt. (MOL.BU).
-By Jan Hromadko, Dow Jones Newswires; +49 69 29 725 503;
jan.hromadko@dowjones.com
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