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The project that more than any other sounded the death knell for the EU-backed Nabucco, the Trans-Anatolian gas pipeline (TANAP), is set to see an Azerbaijan-Turkey inter-governmental agreement signed.

"The work has entered its final stage. The inter-governmental agreement is expected to be signed in Istanbul next week," a senior Turkish official told Reuters. Another official told the newswire that the signing ceremony, to be attended by Prime Minister Tayyip Erdogan and Azeri President Ilham Aliyev, may be held on June 26, but could also be delayed by a few days.

TANAP, which is planned to carry 16bn cubic metres a year (cm/y) of gas from Azerbaijan's Shah Deniz II gasfield to Turkey's European border, cut the ground from under Nabucco. The EU-backed pipeline had planned to do the same, before heading to Austria, but was struggling to convince the operators of Shah Deniz that it was a viable project. Estimated costs had risen to €12bn-15bn, and the failure to secure the extra gas from Central Asia and the Middle East needed to fill its 31bn cm/y capacity had recently provoked unrest from members of the consortium trying to build the route.

Yet TANAP, which will cost just $5bn-7bn and will be 80% owned by Azeri state firm Socar (a member of the Shah Deniz consortium) and 20% by Turkey's Botas, gets round this problem by limiting its capacity to 16bn cm/y, of which Turkey will take 6bn cm whilst the remainder is shipped to Europe through a connecting project. A scaled down "Nabucco West" and the Trans-Adriatic Pipeline (TAP) are competing for that role, with the Shah Deniz consortium yet to make a decision on its eventual European route.

TAP, being built by a consortium of Statoil, E.On and EGL, will actually require the shortest pipeline to be built - a 520km section with 10bn cm/y capacity that will transport gas via Greece and Albania and across the Adriatic Sea to Italy's southern Puglia region. The cost of the project is approximately $2bn.

TAP was the only project competing to serve the Azeri field that has one of the members of the Shah Deniz consortium in its shareholder structure: Statoil with a 42.5% stake. However, BP, which is the lead operator of the Shah Deniz consortium, has entered the fray by unveiling in September of the South East Europe Pipeline (SEEP), which would run from eastern Turkey to the Baumgarten hub in Austria. "BP's SEEP proposal has gone from dark horse to frontrunner in the past three and a half months since it was first mooted," says Andrew Neff of IHS Global Insight.