Serious doubts cast on feasibility of Nabucco pipeline

The Nabucco pipeline has been billed as an important development which will help diversify Europe’s gas supply and reduce its over-reliance on imported gas from Russia, with whom Europe generally has a fractious relationship at best. The 2000 mile pipeline was expected to come in at a cost of € 7.9 billion and was expected to come online in 2015.

However, BP has dealt the project a body blow, claiming that the costs have been underestimated and that the pipeline is more likely to cost in the region of €19 billion, double the original estimate. This price increase is in part due to the increased cost of iron ore, which has rocketed up by 50% in the last year.

There are other factors working against the pipeline project. Expert analysts have pointed out that the gas fields in Turkmenistan and Iraq, which are meant to supply the Nabucco pipeline, are still very undeveloped. According to the Guardian, the pipeline could still be operating at only a third of its projected capacity of 31 billion m³ in 2017 (if completed) because of the undeveloped supply fields and will rely heavily upon BP’s Shah Deniz II field for gas.

Of course all of this is good news for Russia and its rival South Stream pipeline project. Although, it is worth noting that the Nabucco pipeline was not born out of necessity but the strategic need to diversify Europe’s gas supply. In cash-strapped Europe costs will play a factor but if the political will is behind the project then it may still plough ahead and relations with Russia are still pretty frosty.

Read the article online at: https://www.worldpipelines.com/business-news/25022011/serious_doubts_cast_on_feasibility_of_nabucco_pipeline/