Nabucco Gas Pipe’s Cost to Fall on Shorter Route, Mitschek Says

Nabucco West will cost less than the 7.9 billion euros ($10 billion) originally projected for the pipeline project because the scope of construction has shrunk, said Managing Director Reinhard Mitschek.

“It is a shorter line with 1,315 kilometers (817 miles) and we expect it to be less than the original,” Mitschek said today in an interview in Istanbul. “It would be logical to think there will be a proportional reduction.”

Nabucco was originally envisioned to ship gas from the Caspian, Middle East and North Africa as much as 3,900 kilometers to Europe. The revised project, Nabucco West, will connect to the Trans-Anatolian pipeline, a link known as Tanap planned to carry Azeri gas through Turkey. Mitschek declined to specify the new capital expenditure plans.

Nabucco project partners want to reach an agreement with partners in Azerbaijan’s Shah Deniz II field by the end of this year about taking a stake in the proposed link, Mitschek said. The group originally expected an agreement in October.

“We are not in a race,” Mitschek said. “We take time to tune the best project for sellers and buyers.”

BP Plc (BP/), Total SA and State Oil Co. of Azerbaijan are among the developers of the Shah Deniz natural gas field, which may hold 1.2 trillion cubic meters of the fuel in Azerbaijan’s part of the Caspian Sea. The partners have an option to acquire as much as 50 percent of the Trans Adriatic Pipeline, or TAP, a Nabucco competitor.

Azerbaijan is expected to choose to supply either Nabucco or TAP by mid-2013, Mitschek said.

Europe needs 500 billion cubic meters of natural gas annually and Nabucco could feed as much as 23 billion cubic meters a year, Mitschek said, reiterating that pipeline construction should begin in 2015.

To contact the reporters on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net; Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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