Nabucco Pipeline’s Demise Sends OMV to Search for Own Gas

The Nabucco pipeline project, intended to reduce European reliance on Russian natural gas, was itself bypassed today when a group exploiting Caspian Sea reserves opted for a competing project.

Azerbaijan’s Shah Deniz consortium will send Caspian gas via the Trans-Adriatic Pipeline, or TAP, OMV Chief Executive Officer Gerhard Roiss said today at a press conference in Vienna. The choice was driven by higher gas prices in Greece and Italy, he said. A spokeswoman at BP, which controls a quarter of the Shah Deniz gas field, declined to comment.

“We behaved strategically and tried to adjust,” Roiss said. “We want to find our own gas. That’s what we have to focus on now.”

Nabucco, named after the Verdi opera where the idea was hatched in 2004, cobbled together five southeast European energy companies that originally committed to build a 3,300 kilometer (1,980 mile) pipeline that would bring Iranian natural gas to Europe. That project was scaled back in the wake of Iranian sanctions and refocused on transporting gas from Azerbaijan. The most recent plan envisioned a 1,315 kilometer route.

“We need project effectiveness with the best conditions,” Azerbaijan’s Energy Minister Natig Aliyev said earlier this month at a press briefing in Vienna. Commercial viability was the no. 1 criteria in the choice, he said.

The TAP project, being developed by Statoil ASA (STL), EON Ruhrgas and EGL AG, will ship 10 billion cubic meters of Azeri gas a year to Italy from the Turkish border. Greece will receive about 1.5 billion euros of foreign direct investment from the project, TAP spokeswoman Lisa Givert said in January.

OMV may eventually build its own pipeline depending on the results of its Black Sea exploration off Romania’s coast, Roiss said. The company, along with its partner ExxonMobil, are investing $1 billion searching for gas.

To contact the reporter on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net

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

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.