Nabucco May Benefit from Shah Deniz Delay

A significant delay is expected in the sale of natural gas from the Shah Deniz II field in Azerbaijan.

The delay--which could be for six months--could help the sponsors of the Nabucco gas pipeline, as it gives them more time to find a second source of gas and make the project viable.

The consortium of companies working on Shah Deniz II, was aiming at finding a buyer for 10 billion cubic meters of gas in the first half of this year, people close to the negotiation have said.

However, talks with potential buyers are more complex than expected and will draw out the process until later this year, three people told Dow Jones Newswires Friday.

Shah Deniz consortium partner Statoil ASA wasn't immediately available for comment, while BP reiterated the timeline is to have the first gas delivery in 2017.

Under the current plan, Shah Deniz II is expected to add roughly 16 billion cubic meters of annual production as early as 2017, of which 10 billion would be ready for export to the EU.

Sourcing gas from Shah Deniz is key for the European Union plan to diversify its supplies away from Russia.

Nabucco plans to carry 31 bcm across Turkey to Austria, crossing Bulgaria, Romania and Hungary. It would therefore require a second source to make its sponsors--which include RWE and OMV much more attractive bidders for the Shah Deniz II gas.

Nabucco is looking to Turkmenistan and Iraq as sources for those additional gas supplies.

BP and Statoil both own 25.5% stakes of Shah Deniz. The State Oil Co. of Azerbaijan, Lukoil Holdings, Total SA and National Iranian Oil Company all own 10% each, while Turkey's TPAO owns 9%.

Source: Wall Street Journal