In September, three international financial institutions gave a boost to Nabucco – a pipeline project to bring Caspian gas to Central Europe – with a first step toward a financing agreement worth around €4 billion, half of the projected cost.
However, the actual financing decision will not be made before the first quarter of next year, reflecting concerns that the project has not yet secured sufficient gas supplies to make it financially viable.
Nabucco, which is backed by the European Commission and the United States, is owned in equal part by Bulgarian Energy Holding, Botas (Turkey), MOL (Hungary), ÖMV (Austria), RWE (Germany) and Transgaz (Romania).
After numerous delays, construction is now expected to start in 2012, with first deliveries to a hub near Vienna in 2015.
In a first phase, Nabucco is supposed to carry 10 billion cubic metres (bcm) a year from northern Iraq and 8bcm a year from Azerbaijan in 2015, growing to 31bcm a year in subsequent years. Azerbaijan, meanwhile, is trying to keep all options open. The country is projected to produce around 30bcm annually in 2011-14 from existing fields. Once the second phase of the Shah Deniz offshore field comes on stream, in 2017, production could increase by 50%. This is the gas that Nabucco is eyeing.
Two other consortia are also bidding to deliver gas from the second phase of Shah Deniz’s development, with a decision expected by the spring: the Interconnection Turkey-Greece-Italy (ITGI), led by Italy’s Edison, and the proposed Trans-Adriatic Pipeline (TAP), led by Norway’s Statoil and Switzerland’s EGL. The three projects could, in principle, be complementary at a later stage if sufficient demand exists and if supplies can be secured.
But they are in competition now, even though the consortia have signalled that they are open to ideas for co-operation. Observers fear that opting for ITGI or TAP, which would run across the southern Adriatic to Italy, would leave the Balkans and eastern Europe vulnerable to Russia’s influence through the South Stream pipeline, projected to come on-stream at around the same time.
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