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Message: Groundwork laid for Nabucco
Groundwork laid for Nabucco
http://www.budapesttimes.hu/content/...
| Monday, 02 February 2009 |
 Prime Minister Ferenc Gyurcsány said the “deadlock” of the past few years had been broken after a Nabucco summit hosted in Budapest last Tuesday, even though the EU brushed off his call for EUR 2 billion in subsidy for the non-Russian gas pipeline project.The European Commission did agree, however, with Gyurcsány’s call for an initial EUR 200 to 300 million subsidy to get the project off the ground. As part of a package of subsidy recommendations announced from Brussels last Wednesday, the Commission called for EUR 250 million for Nabucco. The funding is subject to approval by the European Parliament. The EU’s European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) both signalled at the conference that they are willing to part finance the construction of the Nabucco gas pipeline, which will run from Turkey’s eastern border to a gas distribution hub in Austria. Not gone very far The proposal to build a gas pipeline that could bring Central Asian and Middle Eastern gas into the heart of Europe and reduce dependency on Russia for supplies was first given form in 2002. The Austrian oil company OMV and Turkey’s Botas named the planned pipeline “Nabucco” after a Verdi opera about a Babylonian king known to the English-speaking world as Nebuchadnezzar. Since then, the project has languished on the drawing board, although the consortium behind the project has grown to comprise the major energy companies of all the transit countries – Botas (Turkey), Bulgargaz (Bulgaria), Transgaz (Romania), MOL (Hungary), OMV (Austria) – as well as the German RWE. The gas shortages in Central Europe caused when Russia stopped exporting gas in a dispute over pricing with transit country Ukraine gave the project a new momentum, however. After last week’s Nabucco summit in Budapest, it looks like construction of the pipeline might actually begin in the foreseeable future.  Short-term hope “The European Investment Bank is ready to finance projects that further EU objectives of increased sustainability and energy security,” said EIB president Philippe Maystadt. He said the EIB would provide up to a quarter of the financing for the project, providing a firm intergovernmental agreement over the project is reached. The planned 3,300-kilometre Nabucco pipeline has a capacity of 31 billion cubic metres of gas per year, enough to satisfy five per cent of the EU’s current requirements. The EU’s Energy Commissioner Andris Piebalgs also attended the Budapest summit. He urged governments to give official commitments to Nabucco by the end of March. He warned that a failure to do so would mean a missed opportunity, as the project could be taken a step further at an energy summit in Prague scheduled for 7 May. The Czech Prime Minister Mirek Topolanek, who currently hold’s the rotating presidency of the EU, described the effort to reach an agreement on Nabucco as a “test of European solidarity”. At the summit he said “a new crisis could emerge at any time, and next time it could be even worse.”  Russian diversion Both the EU and the US support the Nabucco project, which they see as a way of reducing Europe’s dependency on Russia for its gas supplies. Russia, however, countered the plans in 2007 with its own project, called South Stream, which would carry Russian gas under the Black sea and through the Balkans to Italy. Although Russia has the advantage over the Nabucco consortium of actually having gas, and a lot of it, at its disposal, critics point out that South Stream could cost over twice as much to build as Nabucco, partly due to technical challenges such as laying hundreds of kilometres of pipeline under water. Azerbaijan & Turkey President of Azerbaijan, Ilham Aliyev was at the summit. Azerbaijan, it is hoped, will supply the initial gas for Nabucco when it comes on-stream, possibly in 2013. “The more countries that get their gas from Azerbaijan, the better for us and for those countries,” he said. However, even Azerbaijan is holding back on signing a supply contract with the Nabucco consortium until a firmer political agreement is reached. The main political spanner in the works at present is Turkey, and its insistence that it have access to 15 per cent of the gas passing through Nabucco. The other members of the consortium had envisaged that Turkey would merely be a transit country. The large country is looking to join the EU, in face of stiff opposition from some members, and its role in the Nabucco project could be its strongest card. Cash not the issue The head of the Nabucco consortium, Austrian Reinhard Mitschek, was confident that the political hitches could be overcome. “On the basis of statements from political representatives and the EIB and EBRD, we believe an intergovernmental agreement will be reached very soon,” he said. “There is no need for (heavy EU funding), since the six firms in the consortium are quite capable of raising the required capital. As there is clear political support behind Nabucco, and the EIB and EBRD also back the project, then only the necessary gas needs to be secured,” said energy commissioner Piebalgs. Mitschek was of the same opinion last Tuesday: “Financing will not be an issue. We need to concentrate on the supply,” he said. And that is the next big challenge for Nabucco. Azerbaijan appears willing to sell gas to Europe. Georgia – the country through which Azeri gas would have to transit to reach Turkey was represented at the summit by Deputy Prime Minister Nika Gilauri, who said his country was fully committed to the project. Willing, but less able Representatives of other potential gas suppliers Egypt, Kazakhstan, Turkmenistan and Iraq also made encouraging noises at the Nabucco summit. However, separate infrastructure developments would be necessary for these states to feed gas into Nabucco – for example a trans-Caspian Sea pipeline in the case of Kazakhstan and Turkmenistan. Iran wants in Notably absent from the conference was Iran, although the country has enormous gas reserves, shares a border with Turkey, and signalled as far back as 2007 that it would be willing to sell gas to the Nabucco consortium. The Iranian ambassador to Hungary Ali Reza Irvas told news agency MTI the Sunday before the summit that Iran had been excluded from the summit due to political pressure from the US, which is against Iranian involvement in Nabucco. “Only Iran is capable of filling the Nabucco pipeline once it is built,” he said in a statement. “As Iran is a reliable gas exporter, European countries are still keeping an eye on it,” Irvas said, while expressing the hope that a change in the political situation would allow negotiations to take place. |
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