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BP-Led Group May Decide on Shah Deniz Field Investment This Year

BP Plc-led investors developing the Shah Deniz field in the Caspian Sea plan to make an investment decision this year as the European Union-backed Nabucco pipeline venture seeks to lock in gas purchases.

The group will probably agree on the second phase of Shah Deniz by year-end, said Vaqif Aliyev, a vice president at the State Oil Co. of Azerbaijan, or Socar, a partner in the project.

Talks with Turkey over the transit of Azeri gas through its territory, which have held up an agreement on sales to the EU, may be completed by the end of this month, Aliyev told reporters today in the capital, Baku.

The EU has agreed to help fund the OMV AG-led Nabucco pipeline, which plans to ship Caspian gas through Turkey to Austria, lessening the continent’s dependence on Russian fuel supplies. The Trans Adriatic Pipeline project and the planned Interconnector Italy-Turkey-Greece are also seeking fuel, while OAO Gazprom, Russia’s export monopoly, has said it is willing to buy all Azeri gas.

The EU’s executive arm won a political mandate to negotiate with Azerbaijan and Turkmenistan to secure natural-gas supplies for Nabucco, the EU said today in a statement.

The three pipeline projects have submitted proposed terms, Aliyev said. Details are still lacking on investment periods, the timing of construction, capacity, transit fees and tariffs, he said.

Azerbaijan will consider the capacity of the planned links to carry fuel from newly discovered and prospective resources such as the Total SA-led Absheron field and Socar’s Umid project as it chooses among pipeline ventures vying to carry Shah Deniz- 2 gas to Europe, Aliyev said.

Operated by Total

Absheron, where Paris-based Total is operator and holds a 40 percent stake, may contain 350 billion cubic meters of gas, Xosbaxt Yusifzada, first vice president at Socar, said today. The first gas may be pumped in 2021 or 2022, he said. Socar also owns 40 percent of the project, and GDF Suez (GSZ) SA 20 percent.

The find at Absheron, a prospect previously abandoned by a Chevron Corp-led group that included Total, marks a second success since Socar announced a gas find at the Umid structure in November. With the discovery of Absheron, Azerbaijan’s proven reserves of natural gas grew to 2.5 trillion cubic meters, Yusifzada said.

Source: Bloomberg

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