* Azerbajan, Russia in rivalry over European gas market
* Shah Deniz II to suppy 16 bcm of gas a year from 2019
By Lada Evgrashina
BAKU, Sept 19 (Reuters) - Azerbaijan signed contracts onThursday to supply European buyers with gas, offering analternative supply source to Russia towards the end of thedecade.
Moscow has increased its diplomatic efforts to bring oil andgas rich Azerbaijan closer to its orbit as Russian PresidentVladimir Putin has been keen to restore influence over formerSoviet republics.
However, his trip to Azerbaijan last month yielded fewresults, dashing Moscow's hopes of challenging the dominance ofWestern energy majors there.
Earlier this year, Azeri state oil company SOCAR andpartners including BP and Statoil selected theTrans Adriatic Pipeline (TAP) for potential gas deliveries toEurope, following more than a decade of planning, dealing a blowfor Russia's aspiration for tighter control over gas routes.
SOCAR said on Thursday that buyers of Azeri gas from itsShah Deniz II project are Shell, Bulgargas, Gas NaturalFenosa, Greek DEPA, Germany's E.ON, French GDF Suez, Italian regional utility Hera Trading, SwissAXPO and Italian Enel.
"It is a ground-breaking contract as it secures supplies toEurope from a new supply region for decades at conditionsreflecting European gas markets," Christopher Delbruck, thenewly appointed CEO of E.ON Global Commodities SE, said in astatement.
He added that E.ON's contract with SOCAR spans 25 yearsduring which the company will get 40 billion cubic metres (bcm)of gas.
European buyers have struggled to find alternatives toRussia's gas producer Gazprom, whose contracts linkprices to oil, generally making it expensive compared to thespot market.
Gazprom covers a quarter of Europe's gas needs with over 150bcm of its exports a year. In response to Europe's quest forCaspian supply Gazprom proposed its $39 billion South Streamproject which would pipe gas to northeast Italy through theBlack Sea starting from the end of 2015
ITALY TO GET LION SHARE
Shah Deniz is expected from around 2019 to feed 16 bcm ofgas per year to Europe, with 10 bcm earmarked for Europe and 6bcm for Turkey.
Half of the gas is destined for Italy, a SOCAR officialsaid.
"Around 8 billion cubic metres of gas will be shipped to theItalian market, where European buyers will be getting it fortheir facilities in the country (Italy)," Elshad Nasirov,SOCAR's vice president, told reporters.
Two years ago, the consortium expected around 40 bcm peryear of demand for its gas, but more realistic buyer demands hadreduced the figure, BP's Vice President of Shah DenizDevelopment, Al Cook, told Reuters in March.
SOCAR will act as an operator of sales from Shah Deniz II.Statoil is an sale operator from Shah Deniz I.
