EU funding for Nabucco hits German opposition
Güncelleme Tarihi:
Hürriyet Daily News
OluÅŸturulma Tarihi: Mart 04, 2009 00:00
ISTANBUL - As the EU’s flagship Nabucco project faces financial problems and it is questioned whether it would ever be realized, the German Chancellor opposes EU funding of the project, arguing that there are no shortages of private investors. Merkel says the real problem is finding gas
German Chancellor Angela Merkel confirmed her government’s opposition to subsidizing the Nabucco gas pipeline project with European public funds, stressing that the problem was not financing, but finding the gas.Â
"There is no need for financial support for Nabucco, as there are no shortage of private investors," Merkel told the press following a European Union summit on Sunday, the Web site Euractiv reported yesterday.
It has long been thought that Germany seeks to keep the Nabucco pipeline from becoming an EU project. As a net contributor to the EU budget, Germany would be expected to provide the lion's share of the estimated eight billion euros required to build the pipeline. Germany has also expressed doubts about the feasibility of the project should the pipeline fail to link up with Iranian and Iraqi gas fields due to political uncertainties in either of those countries.
At a recent Nabucco summit in Budapest, Hungarian Prime Minister Ferenc Gyurcs?ny described the pipeline as an issue of national security and suggested the EU should finance the strategic project. The next day, as part of a proposal to reallocate five billion-euros worth of unspent EU funds, the Commission earmarked 250 million euros for Nabucco. But this amount, in fact, represents a risk-sharing facility intended to help secure loans from banks under better conditions than those offered by the market.
The Nabucco pipeline project aims to decrease EU dependence on Russian gas imports by bringing Caspian gas to a hub in Austria via the Balkans. Azerbaijan is seen as the project's most likely first supplier of gas, which may also come from the Middle East in the future. The gas would be shipped to Europe via Turkey, Bulgaria, Romania and Hungary.
High level of risk
According to the Web site of the Nabucco pipeline project, construction is scheduled to begin in 2011. On the financing aspects, the site says: "Considering the very large investments involved in the Nabucco project and the corresponding high level of risk, the decision to build the Nabucco project depends on the necessary certainty and security of the regulatory framework applicable to the long-term transmission contracts which will underpin the investments."
Although the first gas shipments are due to flow in 2014, continued hesitation by the private sector about financing the project, compounded by the brief war between Georgia and Russia last August, means that the pipeline faces an uncertain future.
Officially, the European Commission refuses to admit to any setbacks. But the project faces many obstacles, including the planned rival South Stream pipeline supported by Russia's Gazprom. Recently, leading energy experts warned of a series of difficulties in implementing Nabucco in the wake of the Russia-Ukraine gas dispute.
"There is no need for financial support for Nabucco, as there are no shortage of private investors," Merkel told the press following a European Union summit on Sunday, the Web site Euractiv reported yesterday.
It has long been thought that Germany seeks to keep the Nabucco pipeline from becoming an EU project. As a net contributor to the EU budget, Germany would be expected to provide the lion's share of the estimated eight billion euros required to build the pipeline. Germany has also expressed doubts about the feasibility of the project should the pipeline fail to link up with Iranian and Iraqi gas fields due to political uncertainties in either of those countries.
At a recent Nabucco summit in Budapest, Hungarian Prime Minister Ferenc Gyurcs?ny described the pipeline as an issue of national security and suggested the EU should finance the strategic project. The next day, as part of a proposal to reallocate five billion-euros worth of unspent EU funds, the Commission earmarked 250 million euros for Nabucco. But this amount, in fact, represents a risk-sharing facility intended to help secure loans from banks under better conditions than those offered by the market.
The Nabucco pipeline project aims to decrease EU dependence on Russian gas imports by bringing Caspian gas to a hub in Austria via the Balkans. Azerbaijan is seen as the project's most likely first supplier of gas, which may also come from the Middle East in the future. The gas would be shipped to Europe via Turkey, Bulgaria, Romania and Hungary.
High level of risk
According to the Web site of the Nabucco pipeline project, construction is scheduled to begin in 2011. On the financing aspects, the site says: "Considering the very large investments involved in the Nabucco project and the corresponding high level of risk, the decision to build the Nabucco project depends on the necessary certainty and security of the regulatory framework applicable to the long-term transmission contracts which will underpin the investments."
Although the first gas shipments are due to flow in 2014, continued hesitation by the private sector about financing the project, compounded by the brief war between Georgia and Russia last August, means that the pipeline faces an uncertain future.
Officially, the European Commission refuses to admit to any setbacks. But the project faces many obstacles, including the planned rival South Stream pipeline supported by Russia's Gazprom. Recently, leading energy experts warned of a series of difficulties in implementing Nabucco in the wake of the Russia-Ukraine gas dispute.