Russia has buried Nabucco

Austrian group OMV has announced yesterday, that the Nabucco pipeline, designed to supply Europe with natural gas from the Caspian Sea area, has not been selected as a transport route by the Shah Deniz consortium, The consortium, which will exploit one of the biggest gas deposits in Azerbaijan, has chosen the TAP project instead, a pipeline which will supply the Azeri natural gas to via Greece, Albania and Italy.

The announcement by OMV occurred just a few hours after Austrian publication Die Presse wrote, based on sources, that the shareholders of the Shah Deniz consortium of Azerbaijan have selected a different transport route to Europe, via Greece, and Albania to Italy. The publication claims that the project has failed due to the opposition of the BP group, one of the important shareholders of Shah Deniz.

Nabucco has been buried by Russia, sources close to the situation told us. SOCAR, a company owned by the Azeri state and a significant shareholder in Shah Deniz, has succeeded in taking over control of DESFA, the operator of the Greek gas transport, after the Gazprom group pulled out of the privatization race (the announcement was made on Friday). Thus, according to our sources, the Russians have given the Azeris "on a silver platter" the Greek gas distribution network, which facilitates the export through the TAP project.

In the beginning of this week, Rosneft announced that it will sell to BP 20% of its shares in a complex deal of 61 billion dollars. Following this deal, the Russian giant will "pump" through BP a huge volume of crude oil (half of the output of Saudi Arabia), turning the British group into a long-term Russian partner. Thus, the quoted sources also say, for BP it doesn't matter anymore how feasible Nabucco is to the disadvantage of TAP, for the export of gas from the Shah Deniz deposit.

Besides, in the press release of OMV, it is important to emphasize that the offer of Nabucco for taking over the natural gas of Shah Deniz "is very competitive and meets all the selection criteria". OMV claims that the decision of Shah Deniz does not deter it from its expansion plans and that it still intends to play an important part in ensuring the security of the supplying and diversification of Europe's natural gas sources.

Russian president, Vladimir Putin, recently said that the BP-Rosneft transaction is a very good one. Thus, the executive director of Rosneft, Igor Sechin, has become one of the most powerful men in Russia.

The merger between BP and Rosneft involves the British group acquiring 20% of the shares of Rosneft and receiving 17 billions of dollars in cash, for its shares in the partnership between TNK and BP. TNK is owned by four Russian oligarchs, which have never agreed with the officials of BP, thus worsening the decision process. Rosneft wants to take over the position of TNK in the joint-venture of TNK-BP, for the amount of 28 billion US dollars cash.

The takeover of TNK-BP by Rosneft will create the biggest public oil company in the world, with an output of 4.5 million barrels per day. The deal will help BP prosper outside the US, where it created a major environmental incident in the Gulf of Mexico in 2010.

Azerbaijan was the main gas supplier for Nabucco. The Shah Deniz consortium is operated by BP, in partnership with Statoil (Norway), SOCAR (Azerbaijan), Total (France), Lukoil (Russia), NIOC (Iran), and TPAO (Turkey).

The TAP project concerns the transport of Azeri natural gas from Turkey, through Greece, Albania and Italy, crossing the Adriatic Sea, with the final destination in Italy. The shareholders of the project are Axpo (Switzerland), Statoil (Norway) and E.ON (Germany).

Nabucco's failure also endangers the fate of the AGRI project (Azerbaijan-Georgia-Romania), which also relied on the Azeri natural gas. The project, which is also being promoted by the Romania, was intended to be an alternative route for the natural gas supply, with a quick implementation and a short execution time. Romania thus loses consistent revenues from the transit of gas through Nabucco and AGRI, as well as an important element of pressure in the negotiations with the Russians, in order to obtain a better price.