30 January 2009
A meeting on the status of the planned natural gas pipeline convenes in Budapest.
A high-level conference was held to address the further development of the Nabucco gas pipeline project on January 27, 2008. The event was attended by the board of the Nabucco consortium and representatives from Nabucco partner countries – Austria, Bulgaria, Germany, Hungary, Romania and Turkey. A number of other representatives were also in attendance, including those from the United States, Azerbaijan, Kazakhstan, Turkmenistan, Iraq, Egypt, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the EU.
The $10.1 billion pipeline is projected to carry natural gas from Central Asia, the Middle East and North Africa over a distance of 3,300 km from Turkey through Bulgaria, Romania and Hungary. Similar to the recently-completed Baku-Tbilisi-Ceyhan (BTC) oil pipeline, Nabucco is meant to improve and diversify energy supplies to Europe by reducing the continent’s dependence on Russian routes and the risks associated with such a monopoly.
Nabucco consortium Managing Director Reinhard Mitschek has recently commented that a major breakthrough in the project’s development will be reached in the first quarter of 2009. According to Mitschek, the Budapest conference’s objective will be to “discuss and decide on a roadmap to go ahead.” Mitschek also remarked that the project is “on a good path” to become operational by the 2013.
The recent natural gas delivery dispute between Ukraine and Russia seems to have further made urgent the need for alternate energy supply sources for Europe. The Nabucco Consortium appears to be aware of this; with Managing Director Mitschek referring to “current developments” and diversification of routes and sources.
Although the Russian government is not officially opposed to Nabucco, Russian officials have on multiple occasions expressed doubt towards the project’s viability; especially when it comes to the availability of supply; and emphasis the importance of alternate – i.e. Russian routes. Azerbaijan has not yet committed its natural gas to Nabucco, leaving open the option of working with Russian state-owned Gazprom instead. According to Azerbaijani President Ilham Aliyev, Azerbaijan will make its decision in the near future based on prices offered for its natural gas.
Contrary to Russian skepticism towards the Nabucco project however, recent surveys carried out by the Nabucco consortium indicate that that there will be more than enough sources to fill the pipeline. 70 billion cubic meters of natural gas per year is the estimated to be available; more than twice the initial expected capacity of 31 billion cubic meters.
In the past few years, funding problems, unanticipated costs and environmental concerns have delayed the pipeline’s construction, but the recent rise of interest in the project’s completion will likely have an accelerating effect on the implementation phase of the pipeline’s construction. The Nabucco consortium has announced that construction orders for the pipeline will be tendered late in 2009 or in early 2010.
Several international financial institutions (IFI’s) have become involved in the Nabucco project, with EBRD offering to “contribute its resources and experience that it gained during the successful arrangement of the BTC oil pipeline.” The BTC project has received numerous complaints from international civil society groups (CSO’s) as well as the local population being directly impacted by the pipeline. Just as with BTC, CSO’s have been very critical of Nabucco and the potentially significant environmental and social problems it poses to the large area of its activity.
Resources
- Energy Minister Heads to Hungary to Discuss Nabucco. Today's Zaman, January 26, 2009.
- Azerbaijan Will Make Nabucco Decision on Price, By Zoltan Simon, Bloomberg News, January 26, 2009.
- Nabucco to Call for Gas Pipe Builders by Early 2010, By Katarzyna Klimasinska, Bloomberg News, January 23, 2009.