Azernews.Az

FRANKFURT – Norwegian energy company Statoil ASA said Wednesday that the consortium operating the Shah Deniz gas field in Azerbaijan plans to begin bilateral talks with potential customers over the supply of around 10 billion cubic meters of gas a year to be produced in the field's second stage of expansion.

A second development phase of the Shah Deniz natural gas field--located in the south Caspian Basin and Azerbeijan's largest gas field--is crucial for the European Union's aim to diversify its gas supply away from Russia because at the moment it offers the best potential for an easy export to the 27-country bloc. The European Commission has been strongly pushing to build a pipeline to carry that gas through Turkey to its countries.

The second expansion stage of Shah Deniz is expected to reach output of 16 BCM a year from 2016 or possibly as early as 2014.

"We're planning bilateral negotiations with potential customers...," a spokeswoman for Statoil, which is a member of the Shah Deniz consortium, said in a response to emailed questions.

The Statoil spokeswoman added that the Shah Deniz 2 consortium isn't planning a tender process, denying recent reports in the Turkish media that said potential customers have been notified about an upcoming auction process.

"A number of potential customers have been prequalified and negotiations will be initiated in a short while," the spokeswoman said.

She added that the customers include three "potential pipeline projects," but didn't name any of them.

Turkish media had reported that the Shah Deniz owners are seeking talks with members of the Nabucco, Trans Adriatic Pipeline, or TAP, and Interconnector Turkey, Greece, Italy, or ITGI, consortia.

Germany's RWE AG - a member of the Nabucco project - said it is interested in gas from Shah Deniz and in contact with the consortium.

Rival E.ON AG - a member of the TAP project - also expressed interest to source Azeri gas, a spokesman for its gas arm E.ON Ruhrgas said.

"We're in talks with Azerbaijan regarding gas procurement," he said.

BP PLC operates the field. BP and Statoil both own 25.5% stakes in the consortium developing Shah Deniz. The State Oil Co. of Azerbaijan, or Socar, OAO Lukoil Holdings (LKOH.RS) of Russia, France's Total SA (TOT) and National Iranian Oil Company all own 10% each, while Turkey's TPAO owns 9%.