2nd UPDATE: German-Austrian Bayerngas Seeks To Join Nabucco

One day ahead of a key deadline in the closely-watched Caspian pipeline saga, Bayerngas GmbH, a publicly owned German-Austrian gas procurement vehicle, said Friday it intends to join the E.U.-backed Nabucco gas pipeline project that would ship gas from the Caspian region and the Middle East to Central Europe.

The announcement of new support for Nabucco comes just before the Oct. 1 deadline to submit offers to transport natural gas from a giant field off Azerbaijan's Caspian Sea coast known as Shah Deniz II. Securing gas from the Shah Deniz II field is critical for Nabucco and competing pipelines that aim to ship Caspian gas to Europe.

Bayerngas would become the seventh shareholder in the Nabucco project, which enjoys the strongest political support from the European Commission because it would ease European dependence on Russian natural gas. Some leading European energy companies have also lined up behind competing pipeline proposals.

Bayerngas and the Nabucco consortium said that talks between the prospective new consortium member and existing shareholders will now begin to work out the future ownership structure. The initial six members of the Nabucco consortium has included German utility RWE AG (RWE.XE), Austria's OMV AG (OMV.VI) and Hungary's MOL Nyrt (MOL.BU), each of which holds approximately 16.7%.

Bayerngas declined to say how big a stake the company will acquire in Nabucco. A company spokesman said that a final decision on Bayerngas' stake in the project is expected for 2012.

The Austrian economics ministry welcomed Bayerngas' intention to take a "considerable" stake in Nabucco, it said in a statement.

Munich-based Bayerngas is the communal gas procurement platform for its municipal shareholder customers--which include several southern German municipal utilities and regional shareholders from Austria--as well as for regional providers and major industrial customers.

Bayerngas has previously said it intends to build a gas pipeline from Austria to the Bavarian capital Munich. The 85-kilometer pipeline project, named Monaco, is expected to begin operating in 2021 and would effectively link the heavily industrialized Munich region with Austria, which by then could become a major European gas transit hub.

Southern Germany has so far strongly relied on nuclear power for its energy supply. But Germany's decision in July to accelerate the planned nuclear exit following the Japanese reactor accidents in March has highlighted the need for alternative energy supply, with gas expected to gain in importance over the coming years.

Besides Nabucco, the other major proposed pipelines for Caspian gas are the Trans Adriatic Pipeline and Interconnector Turkey-Greece-Italy, or ITGI, pipeline. The Russian-backed South Stream pipeline is also seen as competing for market share in the valuable European gas market.

TAP said Friday that it is ready to submit an offer Oct. 1.

"TAP is ready to submit all the relevant information according to the Shah Deniz selection criteria by the required deadline," spokeswoman Lisa Givert told Dow Jones, adding that it "will present a robust bid tomorrow."

-By Jan Hromadko and Alessandro Torello, Dow Jones Newswires; [phone]; [e-mail]; [e-mail]

(Klaus Hinkel in Frankfurt contributed to this article.)