Nabucco pipeline agreement signed in Ankara

• Intergovernment accord signed on 13th July in Ankara, Turkey
• Concerns about gas supply for Nabucco line
• South Stream rival pushes ahead

A transit deal for the Nabucco gas pipeline has been signed in Ankara by the five countries it will pass through: Turkey, Austria, Hungary, Romania and Bulgaria. The agreement is a step forward for the long-delayed project, but supply and financing for the pipeline remain unsecured.

Reducing dependence

The Nabucco pipeline is designed to provide Europe with natural gas from 2014 and it is hoped that the 3300 km line will reduce European dependence on Russian energy by providing diversification of supply. The Nabucco consortium, comprising Hungary’s MOL, Turkey’s Botas, Austrian OMV, Bulgaria’s Bulgargaz, Romania’s Transgaz and German RWE, wants to pump 31 billion m³/yr to European markets, meeting 5% of Europe’s gas needs.

Sources

The gas is likely to come from Azerbaijan’s Shah Deniz field at first, but more gas will be needed and subsequent suppliers aren’t clear. It is thought that gas could be sourced from Turkmenistan, but this would require a trans-Caspian pipeline in order to hook up with Nabucco. The Kurdish regions of Iraq have been proposed as a possible gas source, whilst Iran, so far, has been discounted. A final financing decision is due next year, but this does depend on the supply issue.

A rival in the pipeline

Meanwhile, progress has been made on Gazprom and Eni’s South Stream project, the E10 billion pipeline seen as a rival to Nabucco. Azerbaijan has promised priority to Gazprom in buying gas from the second phase of the Shah Deniz project. Gazprom has favoured entering into basic co-operation agreements with supplier countries, in contrast to the intergovernmental negotiations required for Nabucco.

However, Nabucco has the support of the west, including the USA. US President Obama has appointed Ambassador Richard Morningstar as a special envoy for Eurasian energy and he, along with US Senator Richard Lugar, attended the Ankara signing. The construction of the Nabucco pipeline, and subsequent flow of gas to Europe through an East-West corridor, is key to US and EU energy strategy.

Read the article online at: https://www.worldpipelines.com/business-news/30092009/nabucco_pipeline_agreement_signed_in_ankara/