Azernews.Az

BP is planning a pipeline stretching 1,300km across three countries to bring gas from Azerbaijan to Europe, the Financial Times reported.

The scheme is a new entrant in the highly charged competition to build a supply route to the Caspian basin and reduce Europe’s dependence on Russian gas.

Until now, three projects have been under consideration, each of which would alter the strategic picture of European energy by constructing a "southern corridor" to Azerbaijan’s Shah Deniz gas field, currently being developed by seven companies, including BP.

The existing contenders are the Nabucco route, favoured by the European Commission; the Trans-Adriatic Pipeline; and the IGI Poseidon scheme.

BP’s new plan, known as the South-East Europe Pipeline, has emerged before a crucial deadline: on Saturday, Nabucco and its two competitors will present their tariff offers to the Shah Deniz consortium, which includes BP. The consortium, which includes Socar, the Azerbaijan state energy company, will decide which pipeline to favour by the end of this year.

Al Cook, BP’s vice-president for Shah Deniz development, described the South-East Europe Pipeline as "another possible solution", saying that BP was "open to the idea" of direct involvement in the project. He added: "It doesn’t follow from this that we necessarily find flaws in the three offers. But it is wise to have another option."

Mr Cook noted that BP had led the construction of two existing pipelines linking Azerbaijan with Turkey. "This gives us the confidence that we could do it again," he said.

The new scheme would try to reconcile the demands of politics and commerce. The Nabucco proposal, described as "heavily politicised" by one banker, involves a 3,863km pipeline running from Turkey to the European gas hub in Austria, at a published cost of €7.9bn. The actual price tag would be as high as $20bn, according to people familiar with the scheme. Moreover, Nabucco would have annual capacity of 31bn cubic metres, compared with the 10bn cu m available from Shah Deniz from 2017.

Europe’s strategic interests explain Nabucco’s size and cost. The idea is to open a new corridor for the European continent to import gas not only from Azerbaijan but the wider Caspian region and the Middle East, including Turkmenistan and Iraq.

BP’s new plan envisages a smaller and cheaper pipeline, geared to the commercial interests of BP and its partners, who plan to invest $22bn in expanding the Shah Deniz field.

The proposed pipeline would start in western Turkey and run across Bulgaria and Romania to Hungary’s eastern frontier. It would make use of existing infrastructure to link to Azerbaijan in the east and the Austrian gas hub in the west. In all, it would be about a third of Nabucco’s length, making it far cheaper.

It would also have about a third of the capacity, commensurate with the 10bn cubic metres of gas that Azerbaijan could supply. However, the pipeline would be flexible enough to be scaled up if other sources of gas emerge.

"It is in the interests of everybody to find that magic number which makes that pipeline both commercially viable and politically interesting," said Riccardo Puliti, head of energy and natural resources at the European Bank for Reconstruction and Development.