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Optimism Over Nabucco Despite Hurdles

OPTIMISM OVER NABUCCO DESPITE HURDLES
By Erol Izmirli and Catherine Gurgenidze

Southeast European Times
Feb 17 2010

Washington announces a new energy strategy and invites Russia to
play a role in a pipeline project intended to diversify the natural
gas supply. But money and political instabilities could still create
roadblocks.

The head of the Nabucco pipeline project is expressing confidence that
it will be brought to completion, while other supporters are looking
for ways to overcome obstacles that have held up progress so far

Nabucco "will be implemented by all means", chief executive Reinhard
Mitchek told the Turkish daily Hurriyet, saying he hoped this year
would be a turning point. He cited recent talks with international
financial institutions as well as negotiations with Azerbaijan,
Turkmenistan and Iraq on pumping their gas through the planned
pipeline.

Intended to ease Europe’s dependence on Russian gas, the US and
EU-backed project has been stymied over finances and the need to find
reliable suppliers. Backers have also worked to counter perceptions
of a rivalry with Moscow-backed pipelines.

In January, Washington said it aimed at "depoliticising" energy
strategy and even suggested that Russia could have a role in Nabucco.

"[There] could be an opportunity for Russia to participate in the
project, not as a controlling partner but as a participant," US
Special Envoy for Eurasian Affairs Richard Morningstar said. "Given
the present global financial situation, it might be the most rational
way of moving forward."

Turkey, a key Nabucco player, is also open to Moscow’s signing
on. "If the consortium cannot find the required amount of gas, it
won’t reject Gazprom’s proposal to join the project as a supplier,"
Turkish foreign ministry deputy undersecretary Hakki Akil told the
monthly magazine Energy Report. "This won’t turn the Nabucco into
Nabuccov. To have a share on the consortium is something different
than joining the project as one of the suppliers."

[Photo illustration by Catherine Gurgenidze for Southeast European
Times]

However, the idea was officially rejected by Russian Ambassador to
Turkey Vladimir Ivanovsky at a meeting held by the Turkish Centre
for International and Strategic Analysis in Ankara on January 27th.

Nabucco was proposed years ago as an alternative energy source for
European countries. Currently, Gazprom controls all pipelines serving
Europe from the east and supplies about 25% of the gas consumed by
European countries.

Nabucco’s member countries — Turkey, Bulgaria, Romania, Hungary and
Austria — signed an intergovernmental agreement in Ankara on July 13th
2009. According to the plan, the 3,300km pipeline will deliver natural
gas to Europe from the rich gas fields of the Caspian basin and Central
Asia, bypassing Russia and eliminating Ukraine’s transit monopoly.

The Nabucco consortium is headed by OMV, the Austrian oil and gas firm,
together with four national energy corporations — Botas of Turkey,
Bulgargaz of Bulgaria, Transgaz of Romania, and MOL of Hungary,
plus RWE, the German energy group.

Finding reliable suppliers is one of the biggest hurdles for the
pipeline, whose capacity is expected to be 31 bcm by 2020.

Nabucco planners consider Azerbaijan the surest source, and the
country’s foreign minister, Araz Azimov, said in a January 29th
interview that a "solution" is likely this year. Analysts, however,
warn that political issues could impede as the country — locked in
bitter dispute with Armenia over Nagorno-Karabakh — seeks greater
leverage. Last year, Baku joined the Moscow-backed South Stream
pipeline project.

Washington also sees Turkmenistan as one of the main Nabucco suppliers,
Morningstar indicated in January. But a number of obstacles stand
in the way of its participation, including existing agreements with
Russia, thorny relations with Azerbaijan and territorial quarrels
regarding the Caspian Sea.

Related ArticlesIraq, meanwhile, is a rich natural gas source, but
internal disagreements make its contribution impossible for the time
being. Iran, another gas rich country, is out of the question unless
political conditions change.

Financing is another unsolved problem.

The European Investment Bank last year confirmed its readiness to
provide $2.25 billion for the project, amounting to 25% of the total
cost. The project consortium is also planning to apply for loans from
international financial institutions, said managing director Mitchek.

Despite the hurdles, Nabucco planners expect to start construction
next year. Nabucco Gas Pipeline International, responsible for building
and managing the pipeline, insists it will start pumping gas to Europe
by 2014.

This content was commissioned for SETimes.com

/xhtml/en_GB/features/setimes/features/2010/02/17/ feature-02

From: Emil Lazarian | Ararat NewsPress

http://www.setimes.com/cocoon/setimes
Emil Lazarian: “I should like to see any power of the world destroy this race, this small tribe of unimportant people, whose wars have all been fought and lost, whose structures have crumbled, literature is unread, music is unheard, and prayers are no more answered. Go ahead, destroy Armenia . See if you can do it. Send them into the desert without bread or water. Burn their homes and churches. Then see if they will not laugh, sing and pray again. For when two of them meet anywhere in the world, see if they will not create a New Armenia.” - WS
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