BP Says EU Wants Three Times More Azeri Gas Than Able to Supply

BP Plc (BP/) is seeing European demand for natural gas from Azerbaijan’s Caspian Sea Shah Deniz field at levels three times that of the developers’ supply capacity.

“We are positively surprised by both the level of demand and the offers we are getting from the buyers within Europe,” Al Cook, the energy company’s vice president for Shah Deniz in Azerbaijan, said today in Baku, the capital.

Shah Deniz partners including State Oil Co. of Azerbaijan, or Socar, Statoil ASA (STL) and Total SA (FP), have received offers for more than 30 billion cubic meters of gas a year, compared with the 10 billion available for the European Union, Cook said. The partners are focusing on the most valuable offers, he said.

The EU is looking to Shah Deniz, estimated to contain 1.2 trillion cubic meters of gas, and other deposits in the Caspian to diversify supply away from Russia, which meets a quarter of its demand. The field’s developers this month choose whether to use a proposed Nabucco West link or the Trans-Adriatic Pipeline to supply natural gas to Europe from the Turkish border.

Socar Vice President for Marketing and Investment Elshad Nasirov said last week the fuel will be sold at “hub-related prices” based on market levels instead of contracts linked to oil rates. Cook today said the “nature” of the price depends on the needs of European buyers and the field’s developers.

Some exploration and development opportunities in the field will become part of a new phase of the project, he said.

“There are some higher level reservoirs that we are not going to develop as part of Shah Deniz 2,” Cook said. “There are also some deeper reservoirs. We made a discovery a few years ago in deep horizons of the field that we call Shah Deniz Deep.

“All of these could be incorporated into future developments: This would become Shah Deniz Stage Three.”

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

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.