Bloomberg News

BP-Led Shah Deniz Group to Buy ‘Large Stake’ in EU Gas Pipe

July 04, 2012

Partners in the BP Plc-led Shah Deniz group will buy a “large stake” in the pipeline they will select to deliver Azeri gas to Europe from the Turkish border, State Oil Co. of Azerbaijan President Rovnaq Abdullayev said.

“We have told both Nabucco West and Trans-Adriatic Pipeline partners that we will buy a large stake from the pipeline project we choose,” Abdullayev told reporters today in Azerbaijan’s third city of Sumqayit. “It will be so large a stake that it will enable us to make decisions.”

The Shah Deniz group, also including Statoil ASA (STL), Total SA (FP), OAO Lukoil, Naftiran Intertrade Co. and Turkiye Petrolleri AO, will decide between the pipelines in May 2013, he said.

Azerbaijan and Turkey agreed on June 26 to build a 2,000 kilometer (1,240 mile) trans-Anatolia gas pipeline, known as Tanap, to ship Azeri gas to the European Union through Turkey.

The Azeri state oil company, known as Socar, will share its 80 percent in Tanap with the Shah Deniz partners, Abdullayev said, declining to elaborate. Turkey’s Boru Hatlari Ile Petrol Tasima AS and Turkiye Petrolleri AO hold a 20 percent stake.

The EU plans to diversify supply away from Russia, provider of a quarter of its natural gas, after disruptions of deliveries sent through Ukraine following disputes between the two nations.

“It’s unlikely any member of the Shah Deniz consortium will be able to buy a large enough share in either the Nabucco or the TAP project to be able to make decisions on a unilateral basis,” said Philipp Chladek, a Bloomberg Industries analyst. “None of the current shareholders of the pipeline projects hold the majority. They pursue very different interests, and all of them will have to be taken account of.”

BP will need to coordinate with the Shah Deniz group to avoid conflicts of interest should it join TAP, Abdullayev said. Shah Deniz Vice President Al Cook said in an interview last month that BP was seeking a “material stake” in the project.

To contact the reporter on this story: Zulfugar Agayev in Baku at zagayev@bloomberg.net

To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net


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