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Azeri Energy Minister Backs Nabucco West Gas Pipeline

Source: Reuters 7/24/2012, Location: Asia

Azerbaijan's best bet for piping natural gas to western Europe from the Caspian Sea is the Nabucco West project, Industry and Energy Minister Natik Aliyev said on Tuesday ahead of a formal decision. Aliyev's comment is not an official decision, but comes as the government is preparing to decide between Nabucco West or the Trans-Adriatic Pipeline (TAP), which would take a southern route into Italy. Nabucco West would take a northern route from the Turkish-Bulgarian border to Baumgarten, Austria.

'I consider that Nabucco West is the best option from all points of view,' Aliyev told reporters. 'It has a big capacity, big diameter, and it gives us the opportunity to deliver gas to east and central Europe. It's a more reliable market for Azeri gas.'

State oil company SOCAR was not immediately available for comment. Nabucco West and TAP were shortlisted earlier this year by Azerbaijan's Shah Deniz II consortium, led by BP and Statoil.

The European Commission says it welcomes progress towards diversifying the EU's supplies away from heavy reliance on Russian gas through a route it calls the Southern Corridor. It says it does not favour one project or route over another as long as it carries Azeri gas. 'The Commission's position on the Southern Corridor is consistently independent of pipeline options, establishing criteria for success, not mandating one pipeline or another,' Commission spokeswoman Marlene Holzner said in an emailed comment.

Azeri gas fields are the most developed new non-Russian sources of natural gas that can be pumped to the European Union through pipelines. The gas would first move through Turkey before taking either TAP's southern route or the Nabucco West path into Austria.

TAP, whose partners are Statoil, Swiss EGL and Germany's E.ON Ruhrgas, was not immediately available to comment. In the past it has said it is well-placed to fulfil the EU's criterion of ensuring reliable supply. It also said it could ease the financial problems of Greece and Italy - nations it would travel through, by providing hundreds of jobs.

BP operates the Shah Deniz II gas field, which is thought to contain 1.2 trillion cubic metres of gas. BP holds a 25.5 percent stake, as does Statoil. The rest is divided between Azerbaijan state oil company SOCAR, Russia's LUKOIL, NICO, Total and TPAO.

Nabucco's six shareholders are Austria's OMV, Germany's RWE, Hungary's MOL through its gas pipeline operator FGSZ, Turkey's Botas, BEH of Bulgaria and Romania's Transgaz.

'Azeri's preference for Nabucco West is obvious. The scale-ability of the project could enable additional Azeri gas to be easily monetised,' said Massimo Di Odoardo, principal analyst at Wood Mackenzie.

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