UAE Partnering With Nabucco?

Via Energy Daily, a report that the United Arab Emirates is moving into position as a possible partner in the planned 2,100-mile Nabucco pipeline to pump natural gas from the Caspian region to Europe.  As the article notes:

“…The Emirates is using its $328 billion sovereign wealth fund to invest in energy-rich Turkmenistan, which has the world fourth largest has reserves.

It recently took the strategic decision to diversify its gas exports away from Russia, with Europe tagged as a possible market.

The move by the Central Asian state has boosted the prospects of getting the Nabucco project up and running following problems with securing sufficient gas supply to make the $11 billion project viable.

The proposed pipeline will run from Azerbaijan to Austria via Turkey and, once fully operational, would carry 31 billion cubic meters of natural gas per year to Europe, allowing it to sharply reduce its dependence on Russian gas.

Iraq has been moving toward providing up to 8 bcm a year via Turkey, its northern neighbor through which it exports oil from the Kirkuk fields via the Mediterranean terminal at Ceyhan.

But its efforts have been held up because of wrangling between the central government in Baghdad and the semi-autonomous Kurdish enclave in the northeast.

The oil-rich United Arab Emirates, the second Arab state tipped as a partner in the Nabucco project, is investing heavily in exploration in Turkmenistan.

The idea is to secure energy for its own use, to help curb gas imports as demand from power stations exceeds supply and to exploit Europe’s need for gas.

The Emirates have been drilling for oil in Turkmenistan for a decade via Dubai’s Dragon Oil. It now wants to tap into Turkmen gas as the country opens up to foreign investment.

“We want to invest and we’ve been conducting negotiations for a long time,” the Emirate’s Oil Minister Mohammed al-Hamli told Bloomberg News in the Turkmen capital, Ashgabat.

Abu Dhabi’s Mubadala is bidding for Turkmen fields with Conoco Phillips of the United States and al-Hamli said he believes they have “a good chance” of securing an offshore bloc in the Caspian.

“We have the resources, we have the financial incentive to invest and we also have a number of partners who are experienced in this field. So we’re really very optimistic,” he said.

The Emirates has another edge: it’s a 20 percent shareholder in OMV AG of Austria, the lead partner in the Nabucco project. That would put it in a strong position with whatever gas it may find in Turkmenistan.

According to Asia Times Online, which monitors the Central Asia energy sector, another Nabucco shareholder, RWE of Germany, is reported to have found gas offshore near the zone Mubadala is pursuing.

Turkmenistan produced around 68 billion cubic meters of gas in 2008 and it plans to pump around 250 bcm a year by 2020 top establish itself as a major gas exporter.

Following differences with Russia, its erstwhile main customer, the Nabucco project is looming large in the Ashgabat government’s strategic planning.

Azerbaijan recently agreed to boost its contribution to Nabucco from 12 bcm a year to half the planned pipeline’s capacity of 31 bcm a year.

This follows the increase in projected production from the giant Shah Dneiz Two field below the Caspian to 16-25 bcm a year.

First output from Shah Deniz Two is projected to be available by 2016. Shah Deniz One currently produces 9 bcm a year.

On Monday, Turkmenistan announced it would start building a 650-mile pipeline linking its gas fields in the east to the Caspian Sea coast in a bid to increase its export potential. The pipeline will have an annual capacity of 30 bcm with deliveries to commence in June 2015.”



This entry was posted on Thursday, June 3rd, 2010 at 12:07 pm and is filed under Turkmenistan, UAE.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.