Are Morningstar's Comments a Foreshadowing of Nabucco's Fate?

U.S. State Department Special Envoy for Eurasian Energy, Richard Morningstar made another pilgrimage to the Azeri capital to meet with President Ilham Aliyev in support of the Southern Gas Corridor project.

While continuing to express backing for EU-backed Nabucco pipeline, Morningstar commented that a smaller, cheaper alternative could be the best first choice to carry Caspian gas to Europe.

Morningstar continued that US would support any pipeline that will come through the Southern Gas Corridor.

The comments are appear to be an acknowledgement that the Trans Adriatic Pipeline, Interconnector Turkey-Greece-Italy and the recently announced SEEP project backed by BP, may presently rank as favoured options to transport Azeri gas from the Shah Deniz II project to European markets.

Morningstar said though smaller capacity pipelines may be favored, the potential to scale to available gas volumes -- should take precedence.

"It's important if Shah Deniz producers and SOCAR choose a smaller pipeline as the first pipeline that it will be extendable as more gas becomes available," he added.