U.S. Ally Azerbaijan to Exclude Iran From Gas Pipeline to Europe

Azerbaijan plans to exclude Naftiran Intertrade Co., a partner in the BP Plc-led Shah Deniz natural- gas development, from a pipeline project to Europe from the Caspian region.

“Nico’s participation in the Trans-Anatolia pipeline or other pipelines is not being considered,” Vaqif Aliyev, head of State Oil Co. of Azerbaijan’s investments department, said by e- mail, referring to Naftiran, which is a unit of National Iranian Oil Co. “It has not been invited to join.”

Nico holds 10 percent of Shah Deniz, which is estimated to contain 1.2 trillion cubic meters of gas, enough to supply demand in the European Union for about 2 1/2 years. Norway’s Statoil ASA (STL), France’s Total SA (FP), Turkiye Petrolleri AO and Moscow-based OAO Lukoil are Shah Deniz partners with BP and Socar, as the Azeri company is known.

The U.S. and EU have built ties with Azerbaijan since the fall of the Soviet Union to diversify energy supplies away from Russia and the Middle East. Azerbaijan, a mostly Muslim country with a secular government, has sent troops to support U.S. forces in Iraq and Afghanistan.

“Let’s see if it is even possible for Nico to stay in the Shah Deniz consortium,” said Philipp Chladek, an energy analyst at Bloomberg Industries. It is unlikely any company from Iran will be able to participate in international projects given current tensions, he said.

The U.S. and EU are applying sanctions against Iran in an attempt to force the Persian Gulf to curb its nuclear program.

Azerbaijan and Turkey signed an agreement in June to build the 2,000 kilometer (1,240 mile) Trans-Anatolia pipeline, or Tanap, which will deliver at least 10 billion cubic meters of Azeri gas a year to the EU border through Turkey. The project is estimated to cost $7 billion.

Socar plans to share its 80 percent of Tanap with Shah Deniz partners. Turkey’s Boru Hatlari ile Petrol Tasima AS, or Botas, and Shah Deniz-partner TPAO hold the remaining 20 percent of the link.

“In independent projects like this, the selection of shareholders and their stakes are agreed upon mutually by the partners in accordance with their strategies and interests,” Aliyev said, without elaborating on the reason for sidelining Iran.

To contact the reporter on this story: Zulfugar Agayev in Baku at zagayev@bloomberg.net

To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net

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