Bloomberg News

RWE Says Azeri-Turkish Pipeline May Alter Nabucco Planning

December 30, 2011

Dec. 29 (Bloomberg) -- RWE AG said Azeri plans to build a 7 billion-euro ($9 billion) pipeline across Turkey bringing Caspian gas to Europe may require additional guarantees for the Nabucco project that is a candidate to ship the fuel further westward.

While a plan by the State Oil Co. of Azerbaijan to build the Trans-Anatolia pipeline would shorten Nabucco, lowering its investment costs, it raises questions about access and financing, said Stefan Judisch, the head of RWE’s supply and trading unit, in an interview. RWE, Germany’s second-largest utility, is a shareholder in Nabucco Gas Pipeline International GmbH that is led by OMV AG.

Turkey and Azerbaijan signed a memorandum of understanding on Dec. 26 to build a pipeline with a capacity of 16 billion cubic meters a year, transporting natural gas to the European Union border. Nabucco, which had originally planned to cross Turkey, is competing for Azeri supplies with smaller projects such as Interconnector Turkey-Greece-Italy and the Trans- Adriatic Pipeline.

Linking the pipelines may require a “pre-completion guarantee” from the builders of the Trans-Anatolia project as “banks would need a guarantee that gas actually flows,” Judisch said late yesterday by phone. The new project may also raise concerns by potential non-Azeri suppliers from Turkmenistan or Iraq about access to the system, he said.

Azerbaijan has said Nabucco, designed to lower Europe’s dependency on Russian energy imports, or smaller-volume transit projects may be selected by the BP Plc-led developers of the Shah Deniz gas field to carry the fuel from the Turkey-EU border.

The Shah Deniz 2 deposit, estimated to hold 1.2 trillion cubic meters of gas, will have 10 billion cubic meters a year available for export to Europe and 6 billion cubic meters for Turkey when it starts producing in 2017.

--Editors: Angela Cullen, Reed Landberg

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net


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