Oil Major BP Shelves Nabucco Project as Economically Unfeasible

Energy | May 25, 2012, Friday // 18:33|  views

Nabucco Gas Pipeline International GmbH has submitted a smaller version of the ambitious gas pipeline project. Photo by Nabucco Consortium

The Nabucco gas pipeline, which aims to reduce Europe's reliance on Russian gas, has been shelved as an economically unviable project according to a high-ranking employee of oil major BP.

BP representative Iain Conn announced Thursday that the oil major was no longer considering Nabucco as an option for shipping gas from the Shah Deniz Stage 2 Gas field in Azerbaijan.

The BP official made clear that BP and the State Oil Company of Azerbaijan Republic (SOCAR) were discussing only two options for their gas – a smaller version of Nabucco, Nabucco West, and the  South East Europe Pipeline (SEEP).

Shah Deniz was expected to be a key source of gas for Nabucco, shipping around 16 billion cubic meters per year through the pipeline.

Austrian OMV, one of the six partners in the Nabucco consortium, was hoping to secure the missing gas volumes by signing additional agreements with suppliers from Turkmenistan, Iraq and Iran.

However, BP argued that a pipeline that would stay half empty for an indefinite period of time would be economically unfeasible.

The European Commission announced Friday that the original 4000-km version of the gas pipeline project was still being discussed.

German RWE also said that the initial project was not off the table, despite the fact that the shorter route had a greater chance of implementation.

Under the original project, the 4000-km Nabucco gas pipeline is to carry over 30 bcm per year of gas into Europe in order to reduce its dependency on Russian imports.

Under the revised version, the 1300-km pipeline Nabucco West is to transport Caspian gas from the Bulgarian-Turkish border to the Central European Gas Hub (CEGH) in Baumgarten and beyond.

The capacity of the smaller version has not been specified.

Nabucco's shareholders are Austria's OMV, Germany's RWE, Hungary's MOL, Turkey's Botas, Bulgaria's Bulgarian Energy Holding (BEH) and Romania's Transgaz.

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Tags: Nabucco, Nabucco Gas Pipeline International GmbH, Nabucco Consortium, Russian gas, Shah Deniz, azerbaijan, SOCAR, RWE, OMV, Transgaz, Botas, BEH, BP, mol, Nabucco West


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