UK major BP has proposed a fourth way of exporting the 10 billion cubic meters/year of gas available to Europe from the second phase of Azerbaijan's Shah Deniz offshore field.
But it should be seen as a back-up plan rather than a rival, a BP spokesman told Platts Thursday.
"The Shah Deniz partners are very keen to make the project work," he said. For that, there must be a viable export route that will ensure a competitive gas price at the destination markets.
There are three project companies who have for years been vying for the chance to export gas from the Shah Deniz field in the Caspian Sea, each of which is to submit by October 1 to the exports negotiating team its proposed tariff and purchase price. If none of the three satisfy the criteria then the project could founder, the BP spokesman said.
The team, in which BP is a partner, has also asked prospective gas buyers to submit a gas purchase price on that same date. The combination of prices and tariffs will enable the consortium to establish an optimal commercial export and sales solution, so that when production starts up in 2017, the export route is already prepared.
The producing consortium has been negotiating with more than 14 potential buyers, BP said, and held almost 50 meetings with the pipeline consortiums.
But BP is concerned that none of the three will satisfy the criteria that have been set: these include commerciality, scalability, deliverability, alignment with the full field development and public policy considerations.
For example, the Nabucco project has always been described as a 31 billion cubic meter/year line while the amount of gas for export beyond Turkey is only 10 Bcm/year. This raises questions about how competitive the price will be.
BP's aim is to sell the gas in Bulgaria, Romania and Hungary, which is a cheaper option, it says, as well as addressing security of gas supply in a region so dependent on Russian gas.
The decision is due to be made by the end of the year. The other two companies are Interconnector Turkey-Greece Italy and the TransAdriatic Pipeline. Of the three, Norwegian Statoil is a partner in Shah Deniz and also in TAP; while the partners in both ITGI and Nabucco are all absent from the upstream side of the deal.
Gas from the first phase flows to Turkey, which reexports it to Greece. Phase 1 is 8 Bcm/year, Phase 2 will be 16 Bcm/year.
