(Recasts, adds details, comments throughout.)
By Alexis Flynn
LONDON--Shah Deniz, the consortium developing a natural-gas
field offshore Azerbaijan, has finalized its options to carry that
gas to Europe down to two rival proposals, the penultimate decision
in a years-long process that is key for Europe's strategy of
diversifying energy supplies.
BP PLC (BP) and its partners in the Shah Deniz gas field said
Thursday they have selected the Nabucco West pipeline concept over
the BP-backed South East Europe Pipeline as one of the two final
options to be considered when the consortium decides on a route to
pipe Caspian gas to Europe next year.
The issue of natural-gas transportation from the Caspian to
Europe is key for the European Union's aim of opening a "corridor"
from Central Asia, across Turkey, and getting new suppliers in an
energy-rich region to ease its dependence on Russia's natural
gas.
Nabucco West will now be paired off in a two-horse race with the
Trans-Adriatic Pipeline, known as TAP, for the right to export gas
from the giant Shah Deniz development offshore Azerbaijan. A final
decision on whether to pipe the gas through a northern route to
Central Europe, provided by Nabucco, or through TAP's southern
route through Italy, is due in 2013.
Nabucco is a joint venture involving Germany's RWE AG (RWE.XE),
Austrian oil firm OMV AG (OMV.VI) and Hungary's Mol Nyrt. (MOL.BU).
Other partners include Bulgargaz EAD, Transgaz SA and Boru Hatlari
ile Petrol Tasima AS. TAP, meanwhile, is backed by EGL AG, Statoil
ASA (STO) and E.ON Ruhrgas AG.
"This represents another important milestone in the development
of Shah Deniz Stage 2 and the transportation of gas resources from
the Caspian to Europe," said BP regional head, Rashid
Javanshir.
Separately, Nabucco's managing director, Reinhard Mitschek,
said: "Nabucco delivers freedom of choice to gas consumers and will
contribute considerably to the security of supply in Europe. We
look forward to a successful cooperation with the producers."
Thursday's decision mirrors a parallel move in February to
narrow down the various pipeline options when the Interconnector
Turkey-Greece-Italy, or ITGI, concept was excluded in favor of
TAP.
EU Energy Commissioner Gunther Oettinger welcomed the news,
saying it represented "a success for Europe and for our security of
supply."
The EU-championed Nabucco concept has had to scale back its
ambitious plans for a 3,900 kilometer long pipeline from the
eastern border of Turkey to Austria. But fierce competition from
the rival proposals and lingering questions about finding adequate
natural gas supply to fill the line led to the consortium
announcing the truncated Nabucco West concept in May.
BP, which plays a pivotal role in Shah Deniz, has said it will
invest in TAP "to provide funding in the short term", a move that
some have interpreted as a sign that it prefers the Southern
Corridor route. However, the company has stressed that it remains
committed to the selection process that could ultimately see
Nabucco West prevail.
(Alessandro Torello and Jan Hromadko contributed to this
report.)
Write to Alexis Flynn alexis.flynn@dowjones.com