Nabucco alive and well despite crisis
Güncelleme Tarihi:
by Barçın Yinanç
Oluşturulma Tarihi: Ocak 14, 2009 00:00
ISTANBUL - The Nabucco gas pipeline is planned as part of Europe’s strategy for diversifying energy sources and an upcoming summit between stakeholders is expected to give the project a boost. Recent gas cuts from Russia have ignited the countries involved in Nabucco into action
In the wake of the recent flare-up between Russia and Ukraine, the plans for the Nabucco gas pipeline project will go ahead as scheduled, despite global economic turmoil, the project’s managing director has said.
This comes right after the recent crisis Ukraine and Russia highlighted the need for diversification in energy suppliers and supply routes, and the Nabucco project is part of the plan to reduce Europe’s dependence on Russia for its gas, according to the director, Reinhard Mitschek.
A summit, which will take place in Budapest from Jan. 26 to 27, bringing together the ministers and the heads of governments from Austria, Bulgaria, Germany, Hungary, Romania and Turkey, is expected to give a boost to the project.
Speaking at a press briefing here yesterday, Mitschek said although all the sides were near signing the intergovernmental agreement, the summit would take place to overview the project. The 3,400-kilometer pipeline connecting Turkey and Austria, which will transport up to 31 billion cubic meters of gas each year from the Caspian Sea to Western Europe, is expected to cost 7.9 billion euros.
Talking about the implications of the global crisis, Mitschek said while steel prices had gone down, reducing the cost of construction, the cost of financing had gone up, but the decrease in the steel prices had a much more important impact on the overall cost of the project 7.9 billion euros. He said the amount was calculated prior to the economic crisis and had not yet been revised.
The consumption of natural gas in Europe is expected to decrease but there will still be a huge gap between Europe’s production and consumption, Mitschek told the Hürriyet Daily News & Economic Review. A payment dispute between Ukraine and Russia has led to a cut of supplies to Europe, which relies on Russia for a quarter of its natural gas.
Backed by the European Commission to reduce dependence on Russian gas, the project has so far proved slow-moving with the necessary approvals and agreements between the countries concerned still to be signed.
While the prime ministers of Bulgaria and Romania have confirmed their participation in the summit, Hungary has still not received a reply from Turkey on the participation of Prime Minister Recep Tayyip Erdoğan.
One of the main hurdles to Nabucco has been a disagreement over the pricing mechanism between Turkey and Nabucco’s other shareholders. Turkey wants to divert 15 percent of Nabucco’s gas for cheap domestic use. "We should not mix the two issues. Our consortium is about the transmission of the gas not about the trading of gas," Mitschek said, implying that this was an issue to be discussed with potential buyers and sellers.
Fifty percent of the pipeline is allocated to the consortium’s six shareholders, and the other 50 percent to third party countries. The consortium and the EU have reached an understanding on the issue enabling the former to get an exemption because EU law requires a 100 percent allocation to third parties.
The pipeline currently has six shareholders: OMV of Austria, MOL of Hungary, Transgaz of Romania, Bulgargaz of Bulgaria, BOTAŞ of Turkey and RWE of Germany. Russia has put forward two rival projects called South Stream and North Stream. Mitschek said Europe needed many pipeline projects and in this respect these three were not a competing project.
This comes right after the recent crisis Ukraine and Russia highlighted the need for diversification in energy suppliers and supply routes, and the Nabucco project is part of the plan to reduce Europe’s dependence on Russia for its gas, according to the director, Reinhard Mitschek.
A summit, which will take place in Budapest from Jan. 26 to 27, bringing together the ministers and the heads of governments from Austria, Bulgaria, Germany, Hungary, Romania and Turkey, is expected to give a boost to the project.
Speaking at a press briefing here yesterday, Mitschek said although all the sides were near signing the intergovernmental agreement, the summit would take place to overview the project. The 3,400-kilometer pipeline connecting Turkey and Austria, which will transport up to 31 billion cubic meters of gas each year from the Caspian Sea to Western Europe, is expected to cost 7.9 billion euros.
Talking about the implications of the global crisis, Mitschek said while steel prices had gone down, reducing the cost of construction, the cost of financing had gone up, but the decrease in the steel prices had a much more important impact on the overall cost of the project 7.9 billion euros. He said the amount was calculated prior to the economic crisis and had not yet been revised.
The consumption of natural gas in Europe is expected to decrease but there will still be a huge gap between Europe’s production and consumption, Mitschek told the Hürriyet Daily News & Economic Review. A payment dispute between Ukraine and Russia has led to a cut of supplies to Europe, which relies on Russia for a quarter of its natural gas.
Backed by the European Commission to reduce dependence on Russian gas, the project has so far proved slow-moving with the necessary approvals and agreements between the countries concerned still to be signed.
While the prime ministers of Bulgaria and Romania have confirmed their participation in the summit, Hungary has still not received a reply from Turkey on the participation of Prime Minister Recep Tayyip Erdoğan.
One of the main hurdles to Nabucco has been a disagreement over the pricing mechanism between Turkey and Nabucco’s other shareholders. Turkey wants to divert 15 percent of Nabucco’s gas for cheap domestic use. "We should not mix the two issues. Our consortium is about the transmission of the gas not about the trading of gas," Mitschek said, implying that this was an issue to be discussed with potential buyers and sellers.
Fifty percent of the pipeline is allocated to the consortium’s six shareholders, and the other 50 percent to third party countries. The consortium and the EU have reached an understanding on the issue enabling the former to get an exemption because EU law requires a 100 percent allocation to third parties.
The pipeline currently has six shareholders: OMV of Austria, MOL of Hungary, Transgaz of Romania, Bulgargaz of Bulgaria, BOTAŞ of Turkey and RWE of Germany. Russia has put forward two rival projects called South Stream and North Stream. Mitschek said Europe needed many pipeline projects and in this respect these three were not a competing project.