The Austrian energy company OMV, the lead shareholder in the company vying for the northern route, said it had been informed it would not win the pipeline deal, which by some estimates was to cost $4 billion.

The formal announcement, which was expected in Azerbaijan on Friday, is likely to favor a project called the Trans Adriatic Pipeline, which would run about 900 kilometers, or 560 miles, through Greece and Albania, ending in southern Italy. The Austrian route would have been about 1,300 kilometers.

The winning route will convey gas to Europe through a connection to a new pipeline planned to run through Turkey that links back to the Azeri field through Georgia.

A spokesman for the assumed winner, the Trans Adriatic Pipeline group, which is based in Baar, Switzerland, declined to comment on Wednesday.

The reasons for the decision by the gas field’s developer — the Shah Deniz II group — were not disclosed on Wednesday. The group includes Socar, the Azerbaijani national oil company; BP of Britain; Statoil of Norway; and Total of France.

The choice of a South European route is a milestone in a long effort by Azerbaijan and its partners — particularly BP, the field operator — to bring gas from the huge reserves beneath the Caspian Sea directly to Europe in competition with Russia.

Although Azerbaijan’s role as a supplier to Europe would start relatively small, it could grow if the country develops additional finds known to lurk beneath the floor of the Caspian Sea.

BP and other members of the Shah Deniz II group are expected to take a 50 percent shareholding in the pipeline. Shah Deniz II is a gas project in the Caspian Sea, off eastern Azerbaijan, which with its export pipelines is expected to cost more than $40 billion. The group has not made a final investment commitment to proceed with the project, although a decision is expected this year.

A separate Azeri field, the Shah Deniz I, is already producing and exporting gas to Georgia and Turkey.

The biggest loser in the deal is OMV, which did the major research and planning for the northern-route consortium, called Nabucco West, investing about 37 million euros, or $48 million.

Winners include Statoil and a Swiss company, Axpo, which are large shareholders in the Trans Adriatic Pipeline project. E.On, the big German utility, is also a shareholder.

Article source: http://www.nytimes.com/2013/06/27/business/global/europe-route-chosen-for-azerbaijan-gas.html?partner=rss&emc=rss