Norway’s Statoil May Bypass Turkey, Imperiling Nabucco Pipeline
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By Ben Farey
April 2 (Bloomberg) -- StatoilHydro ASA, Norway’s biggest oil and gas producer, is considering cutting Turkey out of plans to ship natural gas from Azerbaijan to Europe.
As Turkey seeks more favorable terms and greater control of energy that flows through its territory, StatoilHydro said it’s weighing other options for shipping gas from the second phase of the Shah Deniz field in Azerbaijan. Bypassing Turkey would be a blow for the Nabucco pipeline to a European hub in Austria.
“The big challenge is how you get the gas to market and issues related to Turkey,” said Peter Mellbye, head of international exploration and production at the Stavanger-based company, at a briefing yesterday in London. Routes across Iran or Russia are possibilities, he said. “We will go for the alternative that gives us the best economic result.”
The European Union is becoming more dependent on imports and pipelines as gas supplies from the North Sea decline. It’s looking for new sources in places such as Azerbaijan that aren’t controlled by Russia, which disrupted European gas supplies in January following a dispute with Ukraine, the transit route for about 80 percent of Russian gas sold in Europe.
Shah Deniz, the biggest gas field in Azerbaijan, now pumps into the BP Plc-operated South Caucasus Pipeline through Turkey. StatoilHydro is joint operator of the field, which holds about two-thirds of the 1.3 billion cubic meters originally present in Troll, Norway’s biggest field, according to StatoilHydro.
Turkey, strategically located between gas consumers in Europe and fields in the Caspian and Middle East, wants more discounted gas for its own use from Azerbaijan, said Julian Lee, senior energy analyst at the Centre for Global Energy Studies in London, in a phone interview today.
‘Poker Game’
“It’s developing into a kind of poker game,” Lee said. Turkey wants to be “a major player” in Europe’s gas supply. “You can kiss Nabucco goodbye” if Azeri gas goes north to Russia rather than west to Europe.
Talks on securing supply for Nabucco, transit fees, routes and regulations will delay completion of the link two years to 2015, EU Commissioner Andris Piebalgs said in an interview in January. Turkey has said it wants to use 15 percent of gas shipped by the pipeline.
StatoilHydro’s Mellbye said there’s “no doubt” Shah Deniz holds enough gas for a second phase of as much as another 15 billion cubic meters of gas a year. The field will produce 8.6 billion cubic meters of gas a year in its first phase.
There may be signs U.S. relations with Iran are changing under the new administration of U.S. President Barack Obama, Mellbye said. “I would not trust these signs yet.” Iran is a partner in the Shah Deniz field.
Nabucco won’t depend solely on the Shah Deniz field, said Christian Dolezal, a spokesman for the Nabucco Gas Pipeline International GmbH, in an e-mailed statement.
Agreement Between Governments
“Negotiations for Shah Deniz II volumes with traders are ongoing but not contracted so far,” the statement said. “Nabucco will not comment on things which have not happened yet.” Dolezal said an agreement between governments on Nabucco is expected to be signed in June.
The 7.9-billion-euro ($10.6 billion) Nabucco Project is led by Austria’s OMV AG. Other partners are Budapest-based Mol Nyrt, Germany’s RWE AG, Bulgaria’s Bulgargaz EAD, Romania’s Transgaz SA and Ankara-based Botas
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGW4JZfWm1BM&refer=home
If it goes ahead and bypasses Turkey it wll at least mean one more chapter down the drain
