Nabucco foreseen to bring financial gain

The proposed 3,300-kilometer Nabucco pipeline, hailed by Ankara as the project of the 21st century, will not only tighten the bond between Turkey and the European Union but will also bring financial gains.

Because 2,000 kilometers of the pipeline will run through Turkish territory, Turkey expects to receive 60 percent of tax revenues or about 400 million to 450 million euros annually under an intergovernmental agreement to be signed Monday, said Foreign Ministry officials.

Prime Minister Recep Tayyip Erdoğan will host the Nabucco summit in Ankara, to be attended by the prime ministers of the transit countries that the pipeline will cross -Bulgaria, Romania, Hungary and Austria - as well as EU Commission President Jose Manuel Barroso, U.S. Special Envoy for Eurasian Energy Richard Morningstar, Georgian President Mikhail Saakashvili and potential supply countries’ ministers.

Ankara sent an invitation to Russia for the multinational summit but has received no response so far, said officials.

Aimed at breaking Russia’s monopoly over natural gas supplies, Nabucco will transport 31 billion cubic meters of Caspian or Middle Eastern gas to the West via Turkey, which officials say is an indicator of the strong bond between Turkey and the EU. Its construction is expected to start in 2010 and be operational in 2014.

The intergovernmental agreement will not include the natural gas shared among participant states because Nabucco is a private sector project and governments own neither the pipeline nor the gas to be pumped, said ministry officials. But in parallel with the pipeline construction, a Caspian Development Cooperation will be set up, a mechanism whose modalities are still being discussed. It is expected to provide gas for member states with more reasonable prices. Officials said it is not clear yet by whom Turkey will be represented at the platform.

In the six-month period after the intergovernmental agreement is signed, the Nabucco consortium will pen a project support agreement with each participant government covering environment protection, insurance, property rights and currency transfer, said ministry officials.

"The intergovernmental agreement will serve to boost the credibility of the project. Potential supply countries will more seriously think about it," said an official.

The European Investment Bank is expected to finance one-fourth of the project. The European Bank for Reconstruction and Development has also expressed willingness to provide financing once it sees gas supply contracts, completion agreements and technical parameters.

"The Nabucco project is expected to cost 8 billion euros, while South Stream is said to cost 20 billion euros. This is enough to prove that Nabucco is more realistic," according to an official.

In Istanbul, Turkey’s Energy Minister Taner Yıldız said, "From now on, the EU will place cooperation and solidarity with Turkey at the forefront regarding energy." His remarks came after a meeting with Azerbaijani state oil company SOCAR Chairman Rovnag Abdullayev. Turkey cannot open the energy chapter in its negotiations with the EU due to objection from EU member Greek Cyprus.