Brussels, 26/01/2009 (Agence Europe) - Political decision makers and the energy companies involved may not have spared any efforts in 2008 to make a reality of the Nabucco project, the gas pipeline to bring gas from the Central Asian and Caspian Region countries, ultimately satisfying 5% of European gas demand, without crossing Russia, but the recent Russia-Ukraine conflict has given it fresh impetus. Although scheduled by the Hungarian authorities for several months, the conference which, on Tuesday 27 January, will bring together in Budapest representatives of the governments and energy companies of the six countries involved in the project - Germany, Austria, Bulgaria, Hungary, Romania and Turkey - the supplier and transit countries -Azerbaijan, Georgia, Iraq, Kazakhstan and Turkmenistan - and the EU represented by Czech Prime Minister Mirek Topolánek and Energy Commissioner Andris Piebalgs, is taking place a just the right time to provide a fresh boost to the almost €10 billion project, the commercial viability of which has been severely challenged if it doesn't take Iranian gas. With a length of 3,300 kilometres and a maximum capacity of 31 billion cubic metres, Nabucco is meant to carry ga s from Central Asia to Austria through Georgia and Turkey, Bulgaria, Romania and Hungary. Work scheduled to begin this year and be completed by 2012, will be carried out by a consortium of six energy companies: OMV of Austria, MOL of Hungary, Transgaz of Romania, Bulgargaz of Bulgaria, Botas of Turkey and RWRE of Germany.
Following the recent gas crisis which threatened the EU's energy security, much is expected of the Budapest conference. Progress in this project, which is supposed to reduce European dependence on Russian gas, was very slow in 2008. Nabucco still faces considerable political and economic obstacles - beginning with Turkey. During his visit to Brussels on 19 January, Turkish Prime Minister Recep Tayyip Erdoigan threatened to block the project if Cyprus continued to block the energy chapter of Turkey's EU accession negotiations, although he retracted this threat a little later. Also at issue are the conditions for the transit of gas through Turkey, the subject of much discussion, including with the European Commission. Ankara is demanding a transit clause under the terms of which the Nabucco operators would allow Turkey to buy 15% of the gas carried by the pipeline at a preferential price. The Botas partners do not want Turkey to use the gas that will flow through the Nabucco pipeline, only assure its transit. The Turkish side says that this is an issue that could be settled in Budapest.
While disagreements with Turkey have hindered progress on an intergovernmental agreement setting the projects long-term conditions, there have been other reasons. Nabucco faces a major hurdle, the lack of political will among the countries involved and suppliers, due to uncertainties over the commercial viability of a gas pipeline when, without Iranian gas, there may not be sufficient gas. Furthermore, Nabucco will be in direct competition with an alternative Russian project, South Stream, led by Gazprom. Without guarantees on certain supply and an intergovernmental agreement, the financing of the project remains uncertain, banks being not very keen to provide money until the long-term conditions are set. Potential supplier; Azerbaijan, Kazakhstan and Turkmenistan, are unenthusiastic about taking part in a project until the financing is guaranteed and the pipeline laid. Iran, which has indicated its desire to supply gas, is not, for the moment, a diplomatically acceptable solution in the eyes of the EU of the United States, which are backing the project.
Were the Budapest conference only to provide a roadmap, this could bring greater clarity and guarantees to institutions such as the EIB, which will be represented in Budapest by its President Philippe Maystadt and which, on Monday, was called on to financially support the project. E.H./transl.rt)