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Shah Deniz II gas sale delayed

by Staff Writers
London (UPI) Mar 4, 2011
The sale of natural gas from the Shah Deniz II field in Azerbaijan will be delayed by as much as six months.

The field, operated by European oil and gas giant BP and other energy companies, was to start supplying an estimated 10 billion cubic meters of natural gas in the first half of this year. However, talks with potential customers have dragged and could take up to six months longer, the Dow Jones newswire cites three unnamed sources as saying.

The EU-backed Nabucco pipeline had hoped to get the gas to fill roughly one-third of its pipeline, which is designed to carry up to 31 billion cubic meters of gas per year from the Caspian and the Middle East to Western Europe, in a bid to reduce the continent's energy dependence on Russia.

Competitors for the Shah Deniz gas include the ITGI pipeline from Turkey to Italy and the Trans-Adriatic Pipeline, led by Statoil ASA and Elektrizitats-Gesellschaft Laufenburg from Switzerland.

The Nabucco consortium, which includes Germany's RWE as well as companies from Austria, Hungary, Bulgaria and Turkey, is also eyeing gas from Turkmenistan and northern Iraq.

Stefan Judisch, chief executive of RWE Supply and Trading, said last month that the Nabucco consortium wants concrete commitments for natural gas deliveries by the end of March so it can launch the pipeline project.

The European Union has identified Nabucco as a key project to diversify Europe's energy imports. European Commission President Jose Manuel Barroso and Energy Commissioner Guenther Oettinger recently visited Azerbaijan and Turkmenistan to secure gas commitments from the region.

The Kremlin-backed South Stream pipeline would move double the amount of gas per year and is vying for similar customers to Nabucco, mainly by rerouting gas from Ukraine. Russia's Gazprom, Italy's Eni as the main European backer of South Stream and EDF from France last summer signed a memorandum of understanding that the French utility would join the pipeline consortium by the end of 2010; the agreement hasn't been finalized.

Experts have questioned that there is supply and demand for all those projects, an analysis that has resulted in what the media has termed the "pipeline war."

Ever since a row over gas prices with Ukraine in 2006, the Kremlin has been accused of using its energy reserves as a political pressure tool. The lack of trust has resulted in conflicts over Europe's diversification strategy, with Russia threatening to supply Asia's emerging economies instead.

The problems have intensified as Europe is pushing for renewable energy and in the wake of the financial crisis demand and prices for gas have tumbled.







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