Is Nabucco-West Revivable?
In late June 2013, the consortium operating Azerbaijan's Shah Deniz gas field selected the Trans Adriatic Pipeline (TAP) as the preferred gas transportation route to the European markets, offering superior terms and conditions over the competing Nabucco-West Pipeline.
Hence TAP became the critical link in the overall Southern Gas Corridor project, moving Azeri gas from the Turkish border from the Trans-Anatolia Pipeline (TANAP), into European markets.
The Shah Deniz consortium is committed to supply 10 billion cubic meters of gas per annum to the EU by 2020 and to increase this volume to 20 bcm/a in ten years. The projected amount of gas production from Shah Deniz Stage 2 (SD2) could not meet both Nabucco-West and TAP’s demanded gas. Nabucco-West thus seemed relegated to history books as another visionary project that never left the drawing board.
A Revival of Nabucco-West?
Hopes for a renewed Nabucco-West appear to have been resurrected by the Prime Minister of Bulgaria.
In a meeting with Azeri President Ilham Aliyev in Sofia on March 4th, Boyko Borisov said that “we want the Nabucco pipeline project to be unfrozen and more precisely – its part through Bulgaria.”
Responding to Borisov’s statement, Aliyev said that Bulgaria could build an interconnector with Greece (Interconnector Greece Bulgaria IGB pipeline) to draw gas from the TAP route, which could then be sent on to Romania and Hungary.
A glance at Azerbaijan’s gas export perspective
At present, Azerbaijan has plans to produce 54 bcm/a and export 25 bcm/a of gas by 2020. Currently the Caspian nation exports 8.5 bcm/a of gas generated from the first stage of the Shah Deniz project (SD1), inaugurated in 2006.
Baku is scheduled to deliver 6 bcm/a of gas to Turkey in 2019 and 10 bcm/a to Europe in 2020 via the second stage of the Shah Deniz (SD2), however, Azerbaijan has other gas fields which is expected to become operational in coming years.
Azerbaijan’s gas reserves stand at 2.6 trillion cubic meters, which of Shah Deniz accounts for approximately 38.5 percent of the total, Azerbaijan also plans to commerce the Shah Deniz Stage 3 after 2020.
In total, as announced by the State Oil Company of Azerbaijan (SOCAR), Azerbaijan has plan to increased the gas export volume to 40 bcm/a by 2025.
While the focus is on Shah Deniz, Azerbaijan possess additional significant gas fields like Absheron, Umid, Babek and Nakhchivan, of which Absheron field is projected to be commenced in 2021, while some 1 bcm/a of gas is produced from Umid currently.
President Aliyev said on March 4 that It’s expected that gas production from Umid and Absheron would reach at least 6 bcm/a by 2021.
Mixing Azeri with Turkmen and Russian Gas
A revival of Nabucco-West is not only focused on increasing Azerbaijan’s gas export capacity but the potential of Turkmen and even Russian gas being added to the flow of Azeri natural gas to Europe.
Brendan Devlin, advisor in the European Commission’s Directorate-General for Energy said on March 6th that Russia can use TAP from a regulatory and political perspective, for shipping its gas to the EU countries.
Russia's cancelled South Stream project it to replaced by Turkish Stream (Turk Stream), aimed to deliver a similar 60+ bcm/a of gas to Turkey through under-water Black Sea pipeline.
On the other hand, the Turkish President Recep Tayyip Erdogan said at a joint press conference in Ankara held with Turkmenistan’s President Gurbanguly Berdimuhamedov on March 3th that Turkey and Turkmenistan discussed the transportation of Turkmen gas through the Caspian Sea to Europe.
The Ministry of Petroleum and Mineral Resources of Turkmenistan has said that it is quite capable of providing the European market with necessary volumes of gas given abundant natural gas reserves and the opportunities of developing the export pipeline infrastructure.
“Turkmenistan actively works to supply from 10 to 30 billion cubic meters of gas per year to the European market.”
Bulgaria currently have a deal with Azerbaijan to take 1 bcm/a of gas, while Croatia, Montenegro, Bosnia and Herzegovina also have memorandum of understandings with Azerbaijan’s in gas import sphere.
The Ionian Adriatic Pipeline (IAP), aimed to transit the natural gas in Southeast Europe also currently under negotiation.
While reviving the "classic" Nabucco-West may be challenging, new defined projects may play a role in delivering natural gas to Europe in the future. As always, nothing is quite straight-forwards in European gas matters.
Ilham Shaban is Director of the Azerbaijan Centre for Oil Studies, in Baku.