Shah Deniz II agrees Nabucco funding deal

Funding deal: Shah Deniz II agrees to take stake in Nabucco West

The Shah Deniz II consortium has agreed in principle to take a 50% non-controlling stake in the Nabucco project, boosting the European pipeline’s chances of becoming a reality.

Talks on the investment were first revealed late last month by Bulgarian Energy Holdings boss Mikhail Andonov, who said then he was confident of a deal being reached.

The Shah Deniz II mega-project in Azerbaijan is operated by BP with Statoil, Socar, Total, Eni, Lukoil, TPAO and NIOC also involved.

The project aims to export 16 billion cubic metres of Azeri natural gas each year, the same capacity as the downsized Nabucco West line.

Under the draft deal, the Shah Deniz II partners will jointly fund the development costs for Nabucco West up to its decision on a European export route for its gas.

Nabucco is owned by six players on an equal 16.7% slice: Austria’s Hungary’s MOL, Turkey’s Botas, Germany’s RWE, Transgaz of Romania and Bulgaria Energy Holdings.

German utility RWE is currently holding talks to sell its stake in Nabucco to OMV.

Nabucco is in the running for Shah Deniz II along with the Trans Adriatic Pipeline (TAP), owned by Statoil, E.ON Ruhrgas and Switzerland's EGL.

Nabucco West runs 1300 kilometres from the Bulgarian-Turkish border to the Austrian hub of Baumgarten, while TAP runs 520 kilometres from the Caspian through Greece, Albania, the Adriatic Sea to southern Italy.

A decision on the export route is expected by 30 June. If Nabucco West is chosen, Shah Deniz II will then take up a half share in Nabucco Gas Pipeline International.

The Shah Deniz II consortium has already signed a funding deal with TAP last year, and had said at the time it also planned to agree a deal with Nabucco.

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