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Sat 15 Nov 2008 11:18 AM

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OMV in talks with BP, Shell over Iraqi gas

Austrian firm to transport gas through planned Nabucco pipeline to reduce EU's reliance on Russia.

Austria's OMV AG is in talks with BP and Royal Dutch Shell to buy Azeri and Iraqi natural gas for transport through the planned Nabucco pipeline, which the EU hopes will reduce its reliance on Russian imports.

OMV spokesman Thomas Huemer said the talks with BP were related to its leading role in the Shakh-Deniz project in Azerbaijan, while Shell has signed a gas deal with Baghdad that could lead to it becoming a major producer there.

The Nabucco consortium hopes gas from phase 2 of the Shakh-Deniz project will be the bedrock of supplies to help get the pipeline off the ground, with additional supplies coming later from Iraq and possibly Iran and the Caspian region.

The shareholders are OMV, Romanian gas pipeline operator Transgaz, German utilituy RWE, Hungarian oil company MOL, Turkish pipeline operator Botas and Bulgarian state gas company Bulgargaz.

OMV said building on the project would start in 2010 and first gas was planned for 2013, but many analysts doubt the project will be able to secure enough gas to get off the ground.

Nabucco spokesman Christian Dolezal said the consortium was confident enough gas would be secured.

The second, $10 billion phase of Shakh-Deniz is expected to come on stream between 2011 and 2012.

BP and Norway's Statoil control Shakh-Deniz, which produces around 15 million cubic metres of gas per day and has reserves of 1.2 trillion cubic metres. (Reuters)

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