TODAY.AZ / Business

Head of RWE Business Development: Nabucco is the most competitive project in the Southern Corridor

30 March 2010 [11:18] - TODAY.AZ
Interview with Jeremy Ellis, Head of Business Development, RWE Supply & Trading, Essen (Germany).
On March 10, a memorandum was signed between RWE and SOCAR on the Nakhchivan offshore field in the Azerbaijani sector of the Caspian Sea. What are the expectations of oil or gas resources in Azerbaijan and especially the Nakhchivan field?

Of course, Azerbaijan has extensive hydrocarbon resources and we also expect a substantial reserve potential in Nakhichevan. But first of all, RWE Dea, responsible for the upstream-activities at RWE, is looking forward to draw up the “Exploration, Development and Production Sharing Agreement” (EDPSA) with SOCAR in the coming months.

How stable is Azerbaijan as a dependable gas transporter to Europe from your point of view?
 
Azerbaijan belongs to the gas-richest region in the world. The country’s oil and gas company SOCAR produces most of its gas, together with western partners, from the giant Shah Deniz field in the Caspian Sea. According to the latest estimates, this field alone holds reserves of 2 trillion cubic meters. During Phase 2 of Shah Deniz development, scheduled to begin in 2012-2013, extended gas exports are planned to a number of countries, including European markets. There is 16 bcm/a of gas available for export by 2014/5 from SD-2 and RWE is in discussions with SOCAR and the SD-2 partners.

The MoU is a further strong signal: Azerbaijan is underpinning clearly its wish to extend the range of partners and projects in energy business westbound, while RWE underlines the Group’s commitment to build up close relationships with countries in the Caspian Region and the Middle East. A further proof to this is the long-term cooperation that RWE and the government of Turkmenistan signed in April last year, covering various projects in the field of energy and exchange of expertise.

Head of the Italian company “Eni”, Paolo Scaroni proposed to merge the South Stream project with the Nabucco project to reduce costs for these projects. How can you comment on that? What possible negativity would be coming out of this merging?

The Nabucco project is the most competitive pipeline project in the Southern corridor as it offers the lowest transportation costs to Europe (hence highest value for Caspian gas producers). Nabucco is the only direct dedicated pipeline to Europe that offers security of transit based on a legally binding international treaty – the recently ratified inter-governmental agreement - and hence true off-taker diversification to the Caspian countries. This project has the full political support of Turkey and the EU. Southstream, IGI and TAP can not commercially compete with Nabucco. Nabucco is therefore the only serious contender to offer diversity of transport routes and off-takers for the Caspian producers.

We can’t see how Nabucco’s overall costs would be reduced by any merger with Southstream, but we do see that Nabucco would reduce Southstream cost base considerably. I can see commercial logic for the South Stream partners in Mr. Scaroni’s remarks. Why transit your gas through a pipeline such as Southstream that would have double the transportation costs of Nabucco? We will, of course, listen to any detailed proposal that adds value to Nabucco, Europe, Turkey and the Caspian gas producers.

Turkey seems to be supporting both the Nabucco project, and South Stream project. What, in your opinion, is Turkey’s strategy here might be?

Let us be very clear: Turkey is a fully paid up committed partner in the Nabucco project. This was once again reaffirmed recently when they ratified the Nabucco Intergovernmental Agreement (IGA). This agreement has granted Nabucco the legal transit rights for marketing the transportation capacity. The ratification now by all the Nabucco transit countries means simply that Nabucco is now ready to go and provides gas suppliers such as Azerbaijan the legal and political framework to start making gas supply commitments. No other project has these rights.

There is no commercial or legal connection between Nabucco and the outstanding gas dispute between Turkey and Azerbaijan – Nabucco partners like us are ready to make full commitments to Azerbaijan, its resources and infrastructure. Nabucco offers Turkey a direct link to the European gas markets, an ability to manage its gas portfolio and security of supply concerns (Nabucco will also have reverse flow capability), assist in its ambitions to create a gas hub, create more liquidity and competition in it gas markets, revenues from tax and dividends, jobs and further development and wealth for Turkey and its neighbours.

In your opinion, how much of a political subtext is included in Nabucco?

Nabucco is first and foremost commercially and technically sound and the most competitive project in the Southern Corridor. Strategically it cannot get any better – more diversification in Europe, more diversification in the Caspian region, better security of supply and market opportunities in Turkey – all clearly stated policy objectives of all these countries. There are always elements of politics in any international gas project – that is part of the gas business. But Nabucco is not driven by politics.


T. Teymur
/Today.Az/
URL: http://www.today.az/news/business/64973.html

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