Turkish gas demand not on table in Nabucco talks- official

The European Union backs the project to help lessen its dependence on Russian gas, but Turkey's claims on the fuel were one of many potential obstacles for the 3,300-km pipeline. "The 15 percent out-take is not on the table," Nabucco Managing Director Reinhard Mitschek told Reuters Television in an interview.

"No deal-breaker is on the table and I am confident that Turkey as well as Europe will feel comfortable with the compromises reached."

A deal between Turkey and European governments on transit agreements for the pipeline should be signed on time in June, he said.

Russia opposes Nabucco and has accelerated plans for a rival project to keep its grip on Europe's gas market. It supplies a quarter of EU gas demand. Mitschek said Europe would need both Nabucco and Russian gas.

"Nabucco is not an anti-Russian project, but a pro-European project," he said. "We will need the Russian gas in the future for Europe. In addition to that, we will also take alternative gas on board."

FIRST GAS

A final investment decision should be taken on Nabucco in early 2010, he said. Construction was scheduled to start in 2011 to ship first gas in 2014, he added.

Iraq's Kurdistan heralded a plan to export gas from the semi-autonomous region through the pipeline earlier this month, although the central government rejected the scheme. Baghdad has also said it could supply Nabucco from another part of Iraq.

Iraq's central and Kurdish government have repeatedly clashed over oil and gas deals. Mitschek said he believed the two would come to some compromise that would allow gas from Iraq to flow to Europe through Europe.

"They are all interested to receive foreign currency to improve and build up their markets and their industries so they would like to export their gas to Turkey and to Europe," he said.

It remained to be seen whether gas from Azerbaijan or from Iraq would fill the first phase of Nabucco, he added. That would depend on the speed of development of the project, he said.

Nabucco was not concerned about some of its shareholders looking at alternative future gas supplies, Mitschek said.

The market would need more alternative supply routes in the future, but Nabucco was the top priority for shareholders, he added.

Romania said on Thursday it would consider other projects if talks on Nabucco did not advance.

Falling construction and engineering costs should outpace rising financing costs to cut Nabucco's cost to below the existing 7.9 billion euro ($11.05 billion) estimate for the project, Mitschek added. He declined to estimate how much could be cut from that budget.

Around 30 percent of the finance for the project would come from the shareholders, while the rest would mostly come from the European Investment Bank, the European Bank for Reconstruction and Development and from credit export agencies, he said.

Nabucco's shareholders are Austria's OMV, Bulgaria's Bulgargaz, Germany's RWE, Hungary's MOL, Romania's Transgaz and Turkey's Botas.