Azernews.Az

By Gulgiz Dadashova

The consortium developing Azerbaijan's giant Shah Deniz field in the Caspian Sea has begun evaluating final offers it has received from Nabucco Gas Pipeline International GmbH (NIC) and Trans Adriatic Pipeline (TAP) for transportation of Shah Deniz Stage 2 gas to Europe.

NIC and TAP submitted their bids to the Shah Deniz consortium late last week.

BP Azerbaijan, the operator of the Shah Deniz project, said the submissions allow the Shah Deniz consortium to conduct the final evaluation of each of the transportation options and make an informed decision on the preferred export route to European markets.

A final decision on the pipeline route is due to be made in late June 2013.

The transportation offers include substantial information about the technical, regulatory, financial and other aspects of the Nabucco West and TAP projects.

Nabucco West is a short-cut version of Nabucco project, which envisages construction of a pipeline from the Turkish-Bulgarian border to Austria. The project's shareholders are Bulgarian Energy Holding, Romanian Transgaz, Turkish Botas, Austrian OMV, German RWE and Hungary's FGSZ.

TAP project is designed to transport gas from the Caspian region via Greece and Albania and across the Adriatic Sea to southern Italy and further into western Europe. TAP's initial capacity will be 10 billion cubic meters per year, but it is easily expandable to 20 billion cubic meters. TAP's shareholders are AXPO of Switzerland (42.5 percent), Norway's Statoil (42.5 percent) and E.ON Ruhrgas of Germany (15 percent).

BP Azerbaijan said the consortium "now enters a phase of detailed evaluation during which the offers will be assessed against the publicly communicated selection principles".

"Those are commerciality, project deliverability, financial deliverability, engineering design, alignment and transparency, operability, scalability and public policy considerations. Clarification meetings will be held with each of the pipeline companies," the company said.

The transportation offers are expected to become legally binding by late April 2013. In the next month the Shah Deniz consortium also expects to receive binding gas sales offers from potential gas buyers in Europe.

Earlier, Nabucco CEO Reinhard Mitschek, commenting on the document submission, said that NIC offers the Shah Deniz 2 consortium the most competitive package to facilitate their final route decision.

"We look forward to the continued cooperation with the producers in the coming months. We are confident that Nabucco offers a win-win situation for shippers and producers," Mitschek said in a statement.

TAP's Managing Director Kjetil Tungland in turn believes the TAP project has submitted the most compelling offer and in doing so, it successfully meets the eight selection criteria set out by the consortium.

"TAP can now rely on a robust legal framework to the satisfaction of project investors and the Shah Deniz consortium," Tungland said. "TAP's characteristics remain unrivalled: our shareholders are world leading energy companies; TAP is the shortest and most direct solution, and consequently the most technically and commercially viable option. Our pipeline is truly designed with the future in mind."

Azerbaijan's biggest gas field and one of the largest in the world has a production capacity of 8 billion cubic meters a year from its first phase. Its second phase is expected to start production in 2018 and reach another 16 bcm in annual output.

Reserves of the Shah Deniz field are estimated at 1.2 trillion cubic meters of gas.
The contract to develop the offshore field was signed in 1996. Shareholders of the project are: BP and Statoil with 25.5 percent each, NICO, Total, Lukoil and SOCAR with 10 percent each, and TPAO with 9 percent.