BP sees two pipeline choices from Shah Deniz

BP PLC said two alternative pipeline projects are under consideration for the transport of natural gas from its giant Shah Deniz field in the wake of recent agreements signed by Azerbaijan and Turkey.

“The agreements allow two alternative pipelines to be considered in parallel,” said BP. One alternative consists of “an upgrade of the existing Turkish Petroleum Pipeline Corp., or BOTAS, pipeline network, while the other would entail construction of an entirely new standalone pipeline across Turkey.”

The statement came after the boards of BP, BOTAS, and the State Oil Co. of the Azerbaijan Republic (SOCAR) ratified 14 agreements reached last month by Turkey’s Prime Minister Recep Tayyip Erdogan and Azerbaijan’s President Ilham Aliyev on development of Shah Deniz field.

“The agreements provide a legal framework for the sale of Shah Deniz gas to Turkey and its transportation to the European markets through Turkey, starting in 2017,” BP said.

It added that the agreements represent “a major step towards the opening of the so-called Southern Gas Corridor—bringing gas from the Caspian Sea to Europe for the very first time.”

Four pipeline projects, including the European Union-backed Nabucco, are currently competing for gas from Shah Deniz. The others include the Trans-Adriatic Pipeline (TAP), IGI-Poseidon (ITGI), and the South-East European Pipeline (SEEP).

The four proposed lines are now under consideration by the Shah Deniz consortium with a decision expected during first-quarter 2012.

According to analyst Andrew Neff of IHS Global Insight, BP's comments on the issue suggest that it is “not sold on Nabucco, nor TAP, or ITGI, but may instead be lobbying Azerbaijan to support its own recently unveiled proposal, the [SEEP system].”

BP operates Shah Deniz field and holds a 25.5% stake. Statoil also holds 25.5%, while SOCAR, OAO Lukoil Holdings, Total SA, and National Iranian Oil Co. each hold 10% each. TPAO owns 9%.

Contact Eric Watkins at hippalus@yahoo.com.

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