Lack of discipline of Nabucco shareholders could delay Shah-Deniz stage-2 project

Reinhardt Mitcek, Executive Director of Nabucco Gas Pipeline International GmbH, welcomed signing of the cooperation agreement and the agreement on funding and ownership between the Nabucco gas pipeline project shareholders and the Shah-Deniz project partners SOCAR, BP, Statoil and Total and added that the sides started negotiations in June 2012.

The statement of the Nabucco Gas Pipeline International GmbH reads that "this important achievement is the showing of a potential success of the process as well as commercial attractiveness and competitiveness of the Nabucco West from the viewpoint of business possibilities at the promising Southeast and Central European markets."

The main partners of the Shah-Deniz project and the Nabucco pipeline consortium's shareholders signed the agreements in Vienna on January 18, 2013.

While commenting on the Mitcek's statement for Turan the Caspian Barrel Oil Studies Centre said that the agreements give no reasons to suppose that in mid-2013 Azerbaijan will choose the Nabucco-West as the main route for its gas deliveries to Europe.

First of all, Mr. Mitcek admitted that the talks with the Shah-Deniz project partners started in June 2012. The similar talks were conducted almost simultaneously with the shareholders of the trans-Adriatic pipeline (TAP). However, the Shah-Deniz and TAP signed the agreement on funding and ownership and providing the potential investors the right to own 50% shares in the project, if TAP is selected as the final route, on August 9, 2012. The Nabucco shareholders have prolonged the process for almost 8 months. As a result of that they have lost time, while work in TAP was in full swing, which means that the Shah-Deniz partners had more time to collect the design data and study the project in all possible details.

Secondly, the Nabucco-West project's shareholders lack discipline - something constantly happens in the pipeline consortium that does not allow completing the works in time. Therefore, it is hard to believe that within the remaining short period of time all works on the pipeline, which will be laid through the territory of four countries, could be completed.

Thirdly, it will be difficult to complete design and analysis of the new data and compare the entire material from the commercial view point as well as to choose the final route of the gas deliveries by June 2013. Considering that the Shah-Deniz project shareholders doubt that the Stage-2 project could be authorized in June 2013, one can expect that the selection of the route could be postponed, because gas extracted from the Shah-Deniz Stage-2 project will be the main resource for the European pipelines TAP or Nabucco West.

* The first gas from the Stage-2 project is expected to be extracted at the end of 2017 and the Azerbaijani gas deliveries to Europe within this project will begin in quarter 2, 2018.-0-