Nabucco pipeline, which was initially supposed to carry large amounts of gas from Central Asia via Turkey to Europe, should be restricted in accordance with current demand, to avoid a sure death of the project, according to a Reuters analysis. The 4,000-km pipeline was supposed to transport over Europe 40 billion cubic meters of gas per year, about one third of annual demand in the UK, to reduce dependence on imports from Russia. The cost of Nabucco pipeline, estimated at over $12 billion is too high, and sufficient gas supply, outside of Russia, will be difficult to get, say critics of the project.
In the foreseeable future, the only substantial source of gas outside of Russia is Azerbaijan, where producers from Shah Deniz 2, led by BP and Statoil, plan to deliver about 16 billion cubic meters of gas to Europe via Turkey, in 2017 or 2018. “The original concept of Nabucco has always had few chances to draw gas from Shah Deniz 2,” said Massimo Di-Odoardo, analyst at energy consultancy firm Wood Mackenzie (WoodMac). Industry sources said the main problem is that gas generation operations are unprofitable because the high prices require European utility companies to lose money generating energy from the imported gas.
“It is clear that nobody wants to take big risks in infrastructure at this time. Funding decreases and there are concerns about the large number of gas pipelines and liquefied natural gas projects (LNG) in Europe”, said one industry source.
For now, the six shareholders of Nabucco, OMV (Austria), RWE (Germany), MOL (Hungary), Botas (Turkey), BEH (Bulgaria) and Transgaz (Romania) rejected the criticism and supported the project. RWE broke ranks this year, expressing public concerns and MOL announced Thursday that it could sell its stake if the project will not be restricted.
Hungarian oil and gas group is worried about the cost, about ensuring gas supply and about management, according to general manager of MOL, Zsolt Hernádi. “I reported that we are ready to sell our shares if necessary (…) We had to send now a very, very strong signal that we are not willing to fund something further”, said Hernadi, who is also the president of the group, after the annual meeting of MOL shareholders.
Even the European Commission has revised its support for Nabucco, saying that it is a “neutral project” in case the so-called plan Southern Corridor will be put in place, designed to transport gas from Central Asia. As a result, OMV began to consider a shorter version of Nabucco, known as Nabucco West. In this alternative, the pipeline would start from the western border of Turkey, with a much smaller length.
Turkey and Azerbaijan have signed an agreement last December for a trans-Anatolian pipeline project (TANAP), led by the Azeri state company SOCAR. The pipeline will run from Azerbaijan to Turkey’s border with Bulgaria, practically doubling the Nabucco pipeline in the region.
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