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Consortium Turns Down Nabucco West Pipeline

A project map from the website
Austrian energy company OMV has announced that the consortium developing Azerbaijan's Shah Deniz-2 natural-gas and oil field has rejected using the proposed multibillion-dollar Nabucco West pipeline.

OMV, the lead partner of the Nabucco West group, released a statement on June 26 saying the consortium informed the firm about "the decision on their preferred gas-transportation route to Europe."

The decision means it's likely the shorter and cheaper Trans-Adriatic Pipeline (TAP) will be used to carry the gas extracted from under the Caspian Sea to the European market.

Nabucco West and TAP were the only two bidders in the project to transport the Azerbaijani gas.

The Nabucco West route would have taken gas from the Turkish border through Bulgaria, Romania, Hungary, and into Austria.

TAP would take the gas from the Turkish border through Greece, Albania, and across the Adriatic Sea to Italy.

Either route achieves the aim, backed by Washington, of reducing Europe's dependence on Russian gas.

The proposed Trans-Anatolian Gas Pipeline will carry the Shah Deniz-2 gas from the Georgian-Turkish border to Turkey's western border. Azerbaijan plans to use existing pipeline networks to bring the gas from the Caspian coast to the Georgian-Turkish border.

Volumes of Azerbaijani gas shipped from Shah Deniz-2 to Europe in the near term are not likely to exceed 20 billion cubic meters (bcm) annually, a small amount given the European Union's annual consumption of some 500 bcm.

Alternate Routes

EU officials unveiled their "Southern Gas Corridor" energy-route plan in 2009, a network of pipelines that would bring Caspian Basin gas to Europe via routes that avoid Russian territory.

Russia exports more than 150 bcm to European Union countries and some EU officials feared Europe was becoming overly dependent on Russia.

The rejection of the Nabucco West route by the Shah Deniz-2 consortium does not mean the death of the pipeline project. There are still hopes countries on the eastern side of the Caspian Sea -- Turkmenistan, Kazakhstan, and possibly Uzbekistan -- will one day ship their gas to Europe via a proposed trans-Caspian pipeline.

Such a scenario would necessitate the construction of other pipelines through the Caucasus to Europe.

The partners developing the Shah Deniz-2 field are Britain's BP, Azerbaijan's SOCAR, Norway's Statoil, and France's Total.

TAP shareholders are Switzerland's Axpo, Norway's Statoil, and Germany's E.ON.

Nabucco West partners are OMV, Bulgarian Energy Holding, Romania's Transgaz, Hungary's MOL, and Turkey's BOTAS.

With reporting by Reuters and AFP