Europe taps into Azerbaijan’s gas fields

700TAP

It appears that once again commercial considerations have scuppered the EU’s energy aspirations as the Nabucco Pipeline Project is rejected in favour of the Trans-Adriatic Pipeline (TAP). On Wednesday afternoon Gerhard Roiss, the CEO of OMV, the Austrian energy company that led the Nabucco Project, conceded that their proposal was not to be the one chosen by the Shah Deniz consortium to transport gas from Azerbaijan to central Europe.

The project comes as part of a $25 Billion development by the Shah Deniz consortium to utilize Azerbaijan’s extensive gas fields. The Shah Deniz consortium is made up of BP, Norway’s Statoil and Azerbaijan’s national energy company SOCAR and appears to have selected the proposal made by the TAP consortium of Germany’s E. On and the Swiss company Axpo, with the announcement itself scheduled for Friday.

While the European Commission did not officially favour either proposal, the Nabucco pipeline, which was to be one of Europe’s most ambitious infrastructure projects, was widely considered favourable to the EU as a method of diversifying Europe’s energy sources and thus reducing their dependency on Russian gas. The winning Trans-Adriatic Pipeline will run through Greece, Albania and under the Adriatic sea to Italy, a distance 450km shorter than the Nabucco pipeline which was designed to run through Bulgaria, Romania, Hungry and ending in Austria.

The EU was believed to have favoured Nabucco’s proposal because of its ability to better supply the countries in Europe’s Southern Corridor that are almost exclusively dependent on gas from Russia. This comes at a time when Moscow continues to push forward with its plans to secure its influence in the region with its proposed South Stream, a gas pipeline running through Bulgaria, Greece, Austria and Italy that was intended to rival the Nabucco pipeline.

The TAP proposal is believed to have been favoured not only because it is shorter and cheaper to construct, but also because of the higher gas prices available in Italy and Greece than are possible in the markets that the Nabucco pipeline was to accommodate.

Alexander Malden