The final decision to build the Nabucco gas pipeline through Eastern Europe is further delayed well into 2008 as talks to win a sixth investor drag on, OMV executive board member Werner Auli said yesterday.
A thicket of hurdles also including financing, possible steel bottlenecks and pending European Union permits for the 3,300-kilometer pipeline mean it may now start operating in 2012 rather than 2011, Auli told Reuters in an interview.
Austrian oil and gas group OMV heads the consortium planning to build the EUR4.6 billion pipeline carrying Central Asian gas via Turkey to Europe, a key plank in EU plans to diversify its gas supply away from Russia.
“It is our aim to conclude the talks (in the first half of 2007),” Auli said about the negotiations with the sixth investor. “We are very optimistic that this will happen.”
The consortium is currently also owned by Hungary’s MOL, Turkey’s Botas, Bulgaria’s Bulgargaz and Romania’s Transgaz. It has been seeking a sixth partner for a while.
Bulgargaz said in October the five owners were holding talks with four European energy majors – France’s Gaz de France and Total as well as Germany’s E.On and RWE – to potentially sell stakes in the pipeline.
In January, OMV had expected to strike a deal by March. But Turkey said five weeks later that discussions with Total had been halted due to a disagreement and the consortium would launch talks with the number two on the list.
Auli declined to say whom the Nabucco group is talking to, but said all EU-based energy majors were among them.
The consortium also needs Brussels to grant it exemption from antitrust rules which would grant rivals access to the pipeline. It has sent a request to the EU seeking to reserve 50 percent of the pipeline’s capacity for their own use.
“We have two prerequisites (for the final go-ahead) – the famous exemption from Brussels... and then we are going to start the open season process,” said Auli.
EU Energy Commissioner Andris Piebalgs and ministers from the countries crossed by Nabucco said last year they supported granting those exemptions in principle.
Auli said he expected the open season, during which the consortium will publish its terms and conditions, is set to start by end of 2007 or early 2008 and could last some six months. After that, the final investment decision can be made.
However, another delay could come from the massive steel supplies needed to build the pipeline and may push back the start of its operation to 2012 instead of 2011, he said. “Nabucco will need some 2.5 million tons of steel,” said Auli. “The steel market is very overheated at the moment, so this could cost us another year.”
(Reuters, 12/03/2007)