Iran ready to revive Nabucco pipeline project and supply gas to Europe

Iran’s Deputy Oil Minister for International Affairs has said that Iran is ready to supply Europe with gas via the previously aborted Nabucco pipeline, adding that two European countries have already shown interest.

Speaking to the Islamic Republic News Agency (IRNA) on 11 August, Deputy Oil Minister for International Affairs, Ali Majedi, said that, with its major gas fields, Iran could supply gas to Europe via Nabucco and that the abortive gas pipeline project was useless without Iran.

As the international community considers lifting the sanctions against Iran, corporations and governments are strategically positioning themselves to take advantage of Iranian trade possibilities. Delegations from two European countries have already visited Iran this summer to discuss possible routes for gas deliveries, Majedi revealed without naming the countries. He continued that different routes were possible, including supplies via Turkey, Iraq, Syria, Caucasia and the Black Sea, adding that he saw the Turkish route as the most viable option.

The deputy minister said gas from the Shah Deniz gas field in the Caspian Sea would not be solely sufficient for the pipeline, as production at Shah Deniz would not exceed eight billion cubic meters a year, while the designed capacity of the pipeline is at least 23 billion cubic meters, therefore necessitating the need for Iranian involvement. 

Nabucco is an abortive project of a 3,300-kilometer-long gas pipeline from Turkmenistan and Azerbaijan to Germany and Austria and on to the rest of the EU. The project was estimated at €7.9 billion, although in 2012 it was estimated that the project may cost less. OMV Gas GmbH (Austria), BOTAS (Turkey), Bulgargaz (Bulgaria) and Transgaz (Romania) were parts in the consortium for pipeline construction.

Work on the project began in 2002. Initially, plans were to launch the construction in 2011, finishing it by 2014, but the project was repeatedly postponed because of problems with possible gas suppliers. In 2011, it was reported that the launch date was shifted to late 2018. In June 2013, an announcement came that the project had been closed in favour of a more promising project - the Trans-Adriatic pipeline.

For more news and expert analysis about Iran, please see Iran Strategic Focus.

© 2014 Menas Associates

Azerbaijan's gas reserves boosted by Total find

The French oil and gas major Total has discovered a major gas field off the coast of Azerbaijan, the company announced on 9th September. The field is believed to be one of the country's largest, providing a major boost to Azerbaijan's reserves.

The new field lies within the Ashberon block, which Total has been operating through a subsidiary since it made an agreement with Azerbaijan's state energy firm SOCAR in 2009. Total holds 40 per cent, as does SOCAR, while GDF Suez holds the remaining 20 per cent. The block is located around 100km east of the capital Baku, and around 25km north of the enormous Shah Deniz gas field.

The exact size of the discovery remains open to speculation at present. Total announced that the field as a whole had potential for “several trillion cubic feet of gas and associated condensates”, but on 12th September, SOCAR claimed that the discovery holds around 350 billion cubic metres of gas and 45 million tons of gas condensate.

Whatever the exact size of the field, it provides a major fillip to Azerbaijan's energy reserves, perhaps bringing them to 2.55 trillion cubic metres. Contrary to the hopes expressed by some analysts and officials, however, the new discovery is not necessarily a saving grace for the EU's Nabucco project to bring Caspian gas to Europe. Azerbaijan already possesses sufficient gas for Nabucco to get underway, mainly in the second phase of the Shah Deniz field and recent discoveries in the Umid field.

The problems with developing Nabucco have not therefore been about gas reserves – they have been about building pipelines to export the gas, as well as the technical work to actually extract the gas. This is particularly true in the deep and challenging waters of the Caspian Sea. First Vice-President of SOCAR Khoshbakht Yusifzadeh acknowledged this, saying that extraction from the new field was unlikely to begin before 2021 or 2022. Meanwhile negotiations over the pipeline project which will bring gas to Europe continue.

Azerbaijani officials are nonetheless exuberant over the find, with President Ilham Aliyev calling it a “truly remarkable event” and stating that it shows “that our country possesses great opportunities, great potential and bright future.”

Sources: News.az, Wall Street Journal, Financial Times

For more news and expert analysis about the Caspian region, please see Caspian Focus.