Brussels, 21/02/2011 (Agence Europe) - Less than a year before work on the Nabucco gas pipeline gets underway, uncertainty still hangs over its suppliers, even though January saw a cooperation agreement signed with Azerbaijan and promises on supply restated by Turkmenistan.
With the signature of a long-term gas agreement with Azerbaijan signed by European Commission President José Manuel Barroso and Azeri President Alham Aliyev on 13 January, the EU took another step towards making the pan-European Nabucco gas pipeline a reality. This 3,300 kilometre- long pipeline will have an annual capacity of 31 billion cubic metres and will carry gas from the Caspian Sea and Central Asia, through Georgia and Turkey. The following day, Turkmen President Gurbanguly Berdymukhademov's confirmation of his country's commitment to supply gas to Europe gave further reassurance to the European executive, which has put a great deal into the project.
However, despite a clear legal framework, set by the inter-governmental agreement of 13 July 2009 between Austria, Bulgaria, Hungary, Romania and Turkey (see EUROPE 9942) and in spite of an agreement on €4 billion in advance funding by the EIB, the EBRD and the International Finance Cooperation (IFC), a World Bank unit which deals with the private sector, and an envelope of €200 million for the four EU member states signatories of the inter-governmental agreement, plus Germany, as part of the energy infrastructure chapter of the European recovery plan of 2008, uncertainty remains over investors and suppliers of the project. In particular, guarantees of gas supply are still lacking. While there is agreement with Azerbaijan, the Azeris have given no exact information on volume or timescale.
At this point, no sales contract to supply Nabucco has been signed, but the consortium partners - ÖMV of Austria, MOL of Hungary, Transgaz of Romania, Bulgargaz of Bulgaria, Botas of Turkey and TWE of Germany, which each hold 16.67% shares - are negotiating gas contracts with Azerbaijan, Turkmenistan and Iraq. Initially, the gas is likely to come from the Azeri Shah Deniz gas field, where the European firms involved in Nabucco are in competition with Russian gas company Gazprom. “Supply will be firmed up very shortly”, said Nabucco Managing Director Reinhart Mitschek. Production delays in the Shah Deniz 2 field have forced the consortium to push back the date for the pipeline's coming on stream yet again, to the end of 2015. For the first phase, estimated to provide between 8 and 10 billion cubic metres of gas per year, the consortium is looking to Azeri gas and Iraqi gas, rather than Iranian for obvious political reasons. This will mean that the pipeline will have to be extended into Iraq, taking its length to 3,900 kilometres. Overall costs, put at €7.9 billion, will also rise. Indeed, with all the procrastination of the Central Asian countries, Nabucco may even carry Russian gas.
With Mitschek talking about the final investment decision being taken at the end of this year, the European Commission is becoming more and more insistent. At the start of February, Energy Commissioner Günther Oettinger urged the companies involved to press ahead. Determined to see its flagship project up and running, the Commission is also pressing for Nabucco and the Italy-Turkey-Greece interconnection pipeline (ITGI) to merge. (E.H./transl.rt)