Azernews.Az

The competition between the pipeline projects on the Southern direction can become sharper, Pavel Sorokin, Senior Oil & Gas Analyst at Alfa-Bank said.

"The Gazprom's intentions to inevitably realize South Stream project indicates that the pipeline competition on the Southern direction can become sharper," Sorokin told Trend via e-mail.

Sorokin believes that the recent agreement between Russia and Turkey on the South Stream project undoubtedly was very important step for Gazprom.

However, he believes that agreement itself will not significantly affect the realization of Nabucco project.

Ankara and Moscow signed an agreement on the provision of inland waters to Turkey in December 2011 to implement the South Stream project. This project is implemented to diversify the routes of natural gas to European consumers and involves the construction of a pipeline across the Black Sea to the South and Central Europe. The total design capacity of the offshore section of the South Stream is 63 billion cubic meters a year.

Sorokin believes that the lack of necessary gas resource base remains the problem on the way of Nabucco project realization.

With regards to the competition between Nabucco and South Stream project, Sorokin said that in the current economic situation gas demand in Europe hardly justifies the construction of two large pipelines.

Nabucco gas pipeline project is designed to transport gas from the Caspian region and Middle East to the European countries.

Construction of the Nabucco project is planned to start in 2013 and the first supplies are scheduled for 2017. The total length of the pipeline is 3,900 kilometers with a maximum capacity of 31 billion cubic meters per year. The project's partners include the Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and the German RWE.

Gas which will be produced during the second stage of Shah Deniz field development is considered as the main source for Nabucco project.