By SELINA WILLIAMS
LONDON -- The BP-led Shah Deniz consortium said it has begun evaluating binding transportation offers from two pipeline consortiums vying to carry natural gas from the giant offshore Shah Deniz gas field in Azerbaijan into Europe.
The announcement represents another milestone for the BP-led Shah Deniz project
, ahead of a final investment decision expected by the end of this year, and will have major consequences for the region's energy policy by helping to diversify Europe's gas supplies away from dependence on Russia.
Total investment in the development of the second phase of the Shah Deniz gas field and all the pipelines to ship the gas into Europe is estimated at around $40 billion. The estimate includes around $25 billion for the upstream portion of the project
The Trans Adriatic Pipeline (TAP) and rival consortium Nabucco Gas Pipeline
International have competed for years to be selected by the companies developing the Shah Deniz II gas field.
The Shah Deniz consortium, which includes Statoil and Socar, is expected to reach a decision on the pipeline by the end of June.
Nabucco Gas Pipeline International and TAP have been in extensive negotiations with the Shah Deniz consortium following delivery of their initial gas transportation offers at the end of March 2013.
Those offers have now been approved by their shareholders and have become final and binding, BP said in a statement.
The Shah Deniz consortium has also received gas sales offers for more than 30 Bcm of gas a year from more than 15 different gas buyers across Europe. The gas sales offers will be considered alongside the transportation offers to determine the commerciality of the pipeline options and the respective markets.
Nabucco Gas Pipeline International and TAP are offering to carry 10 Bcm a year of gas to different markets in central and southern Europe. The Shah Deniz consortium is currently finalizing its assessment of these offers.
Dow Jones Newswires