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Oil Price: Fresh Hopes for Nabucco Pipeline following Totalâ€™s Natural Gas Discovery

16 September 2011 12:59 (UTC +04:00)

â€œIn September 1994 Azeri President Heydar Aliyev signed a $7.4 billion "deal of the century with 11 Western oil companies to develop Chirag and the offshore sections of the Guneshli oil fields. The agreement was bitterly objected to by Russia, but Aliyev showed his political skillsâ€.

â€œFrom the outset Azerbaijan has been a firm supporter of the 56-inch, 2,050-mile Nabucco pipeline, first proposed in 2002. At a cost initially estimated at $11.4 billion and rising, Nabucco will be the most expensive pipeline ever built, more than three times the cost of the BTC oil pipelineâ€, said Oil Price.

â€œNabuccoâ€™s major stumbling block up to now has been not financing, but where its throughput would come from. Up to now, the only source of Nabucco’s proposed 31 billion cubic meters (bcm) annual throughput was Azerbaijan’s future offshore Caspian Shah Deniz production, estimated at 8 bcm. Chances of adding to the volume from Iran, given sanctions, were slim to none, while the Chinese have essentially stitched up future Turkmen production, leaving Nabucco an underused energy highwayâ€.

â€œLast week French oil giant Total said that it had found a major gas field in the Caspian off the Azeri coast. If Total can exploit the find, then Nabucco could be a possibility on the basis of Azeri Caspian natural gas aloneâ€.