Pipeline to cut Russian reliance is dead, BP says

Pipeline to cut Russian reliance is dead, BP says

LONDON - Reuters
Pipeline to cut Russian reliance is dead, BP says

The Nabucco pipeline is close to a dead end as BP, a major actor in the field, has joined countries which have expressed inconvenience in the lingering plans.

Nabucco, a proposed pipeline that would cut Europe’s dependence on Russian gas by opening a route for Central Asian and Middle Eastern supplies has been shelved because it is not economically viable, anchor supplier BP said.

The UK oil major is no longer considering the Nabucco pipeline as an option for shipping gas from its Shah Deniz 2 gas field in Azerbaijan, Iain Conn, BP’s head of fuel refining and marketing, said in a speech circulated by BP on May 25.

Shah Deniz was supposed to be the anchor supplier for Nabucco, shipping around 16 billion cubic meters per year through the 4,000 kilometer pipeline –just over half the planned total capacity of 30 bcm/year. Project leader, Austrian oil group OMV, hoped to fill it in coming years by signing up additional suppliers in Turkmenistan, Iraq and possibly even Iran. But BP thought a pipeline that would be half empty for an undetermined period of time would be economically unfeasible.

Conn said on May 25 that BP and Azeri state oil group Socar were now considering only a smaller pipeline from the Nabucco consortium, which also includes Germany’s RWE and Hungary’s MOL Group, known as ‘Nabucco West”.

This would have capacity of 16 bcm/year and rather than run from twin spurs in eastern and southern Turkey to Austria, only run 1,600 km from the Turkey-Bulgaria border to Austria. A Nabucco spokesman said the focus is now on Nabucco West but if BP and partners changed their position, the Nabucco consortium, would revert to the original plan.

BP and Shah Deniz partners Socar and Norway’s Statoil could build their own pipeline, known as the South East Europe Pipeline (SEEP), which would run from the Turkish border to Hungary and mainly use existing gas infrastructure.