OMV SAYS A CHALLENGE TO FIND GAS FOR NABUCCO
By Tom Bergin
Reuters
Wednesday February 27 2008
LONDON, Feb 27 (Reuters) – An alternative pipeline backed by the
European Union and United States to reduce European reliance on Russian
gas faces a challenge securing supplies, the chief executive of lead
consortium member OMV said.
Wolfgang Ruttenstorfer told Reuters on Wednesday that means the EU
may need to reconsider opposition to importing gas from Iran if it
wished to improve energy security.
Some analysts and industry executives doubt the Nabucco pipe linking
Turkey and OMV’s Austrian gas hub via Bulgaria, Romania and Hungary
will be built because Russian gas export monopoly Gazprom is proposing
a rival route which also aims to ship gas via southern Europe.
"We need around 10 bcm to take a final investment decision and it
should be feasible to raise this quantity but it’s not easy. It’s a
challenge, that’s for sure," Ruttenstorfer said.
Nabucco is designed to carry 30 billion cubic metres of gas per year.
Last week, Deputy Assistant Secretary of State Matthew Bryza affirmed
Washington’s support for the 5 billion euros project and Ruttenstorfer
said U.S. backing would help to secure gas.
"Azerbaijan is one of the candidates for supplying gas and the U.S. has
some presence there, and also in other areas from where the gas could
come, so it’s definitely helpful," he said.
But even if Azerbaijan agrees to supply Nabucco, it won’t be able
to fill the pipeline alone, so the project hinges on supplies from
other countries, Ruttenstorfer said.
The EU hopes Turkmenistan will supply the pipeline but Ruttenstorfer
said it was a long-term option at best.
"I can’t tell you that it is on the horizon .. because they have sold
a big part of their production increase to Russia already," he said.
Ruttenstorfer said Russia could supply the pipeline but analysts
think it unlikely that state-controlled Gazprom will help a project
which limits its control of Europe’s gas market.
HARD DECISIONS ON IRAN The CEO added Iran, with the world’s
second-largest gas reserves, would also make a good supplier despite
the EU saying in November that Iranian gas was not needed, or desired,
for the pipeline.
EU member countries and the U.S. oppose closer energy ties with Tehran
because of concerns about Iran’s nuclear programme, which has already
attracted United Nations sanctions.
Ruttenstorfer said the EU may have to re-examine its position.
"Europe needs gas from the Caspian area and the Middle East
.. therefore EU foreign policy should look at that situation very
carefully," he said.
Ruttenstorfer added that if the EU blocked imports of Iranian gas
via Nabucco, it may in future face a situation where Gazprom imports
gas from Iran and re-exports it to Europe, further increasing the
continent’s reliance on Russia.
Russia currently imports gas from Turkmenistan, Uzbekistan and
Kazakhstan, which it resells to Ukraine and uses for the Russian
market. Last week, Gazprom said it had agreed to develop more phases
of Iran’s giant South Pars gas field.
Ruttenstorfer added that he supported the entry of Gaz de France as
the seventh partner in Nabucco, although he said progress should not
be delayed to facilitate this.
Turkey has blocked the involvement of GDF because of the French
National Assembly’s approval of a bill making it a crime to deny that
Armenians suffered a genocide at the hands of Ottoman Turks during
World War I.
OMV reaffirmed some of the strongest growth targets in the industry
on Tuesday, projecting growth of 7.5 percent to 2010 but Citigroup
said a lack of new projects starting up after 2008 put in question
the longer term sustainability of upstream growth.
"We will grow at a much slower level, that’s for sure," Ruttenstorfer
acknowledged but added that drilling offshore Romania could support
expanded output. (Reporting by Tom Bergin, Editing by David Cowell)