Taken together, EU financial support for interconnecting emerging
Europe's gas network combined with the prospect of liquefied natural gas (LNG)
shipments of Azeri gas arriving in Romania via Georgia could see Romania turning
into a gas transit hub before you can say "Nabucco." However, claims that these
plans could replace that EU-backed pipeline are arguably overblown.
Two separate developments came together in early 2010 that could see
Romania develop as a gas transit hub before the ongoing battle between two
competing gas pipeline projects, Nabucco versus Russia's South Stream, is
decided.
Firstly, Romania, Georgia and Azerbaijan signed a memorandum in
Bucharest on April 13 for gas transport through the
Azerbaijan-Georgia-Romania-Interconnection project, known as Agri. Romania's
economy minister, Adriean Videanu, told newswires the plan could be finished
before the EU-backed Nabucco project to pipe Caspian basin gas to Europe via
Turkey is completed sometime after 2015.
The gas produced will be transported by pipeline to Georgia, liquefied
or compressed, and then shipped to Romania for domestic use or onward to other
EU countries. According to earlier statements by Romanian Energy Minister Tudor
Serban, the project could handle 3bn-8bn cubic metres of gas per year (cm/y),
and would cost €4bn-6bn to build. Romania's Transgaz Medias and Azerbaijan's
Socar, plus a Georgian company, would implement the project.
Secondly, the EU finalised plans to increase the linkages between
individual gas transportation networks of member countries to reduce energy
risks by making it possible to supply one market with another. Gunther
Oettinger, European commissioner for energy, announced on March 5 that funding
for a whole string of related projects, including interconnectors to be built
between Romania, Hungary and Bulgaria. Romania currently lacks any export
capacity for gas to Central Europe, so the EU plan is to build an interconnector
from Romania's Arad to Hungary's Szeged that would provide new options for
transiting gas. "In three to four years, Romania will be sending gas all the way
to Austria," Serban was quoted by Ziarul Financiar as saying. "The project with
Azerbaijan and Georgia could be completed quicker than Nabucco."
First steps
Romania energy specialists see these plans - basically a downscaled
version of the "White Stream" plan for Black Sea gas pipeline bringing
Azerbaijani gas to Europe - as the first steps towards Romania becoming Europe's
southern gas transit hub. According to Jean Constantinescu, former head of the
power sector regulatory body and of Transelectrica, the national distribution
network operator, and current president of the Romanian Institute for Energy
Development Studies (IRE), "In my opinion, the new connections to Hungary and
Bulgaria are the first steps only."
"Gas suppliers know that Romania is a particular candidate for a
regional gas hub on the so-called 'Southern Gas Corridor,'" he explains to bne.
"Its strong points relate to existing gas infrastructure, the largest in the
region, and to huge potential for gas storage facilities including depleted gas
deposits. Gas storage in Romania, as for instance at the Margineni facility, can
protect against problems in Ukraine and elsewhere."
Constaninescu also agrees with Serban that the project will be
implemented "most likely in advance of Nabucco commissioning."
Aureliu Leca, a Romanian energy secretary in the early 1990s, tells bne
he sees "a big question mark" hanging over the hugely costly and complicated
Nabucco project. "The recent discussions between Azerbaijan, Georgia and Romania
are supported by the fact that Romania has over 100 years experience with
natural gas, and a developed, if dilapidated, interior network, and considerable
existing underground storage capacities, and a number of potential sites we have
identified," Leca says. "This is a project on the government agenda, and it
seems the only economic way of getting Caspian gas. LNG would be more expensive
than gas from Nabucco, but it is more realistic."
International experts are, however, more sceptical about the
significance of the project. The volume - a maximum of 8bn cm/y - is small
compared with the Nabucco pipeline's proposed 31bn cm/y. They argue that
Azerbaijan's interest in the project may be more tactical than strategic; the
country is in a diplomatic spat with Turkey over the latter's US-backed
rapprochement with Armenia, and due to Turkish overtures to Iran as potential
gas supplier. Moreover, Azerbaijan wants higher prices for the gas it sells to
Turkey. The threat of cutting Turkey out of the Caspian transit route provides
leverage in all these questions.
Independent energy analyst Andrea Bonzanni argues projects like
Romania's are not a competitor of Nabucco, but "are just conceived as a back-up
choice in the case Nabucco fails and, most importantly, a bargaining chip to
show transit and receiving countries, as well as the companies involved in the
venture, that Azerbaijan has alternatives to Nabucco and therefore its
participation has to be well-rewarded."
"Nabucco is expected to be operational by 2015, but the timeframe is
highly uncertain due to the lack of upstream suppliers and financing," says
Bonzanni. "State-of-the-art technology can indeed guarantee supplies of LNG
within a shorter time, but I doubt any of the parties involved will push hard
for a rapid conclusion of this venture," says Bonzanni.
Moreover, Romania is not the only country hatching similar plans.
Azerbaijan recently agreed on a similar smaller project to ship 1bn of
compressed natural gas to Bulgaria. "Undoubtedly, Romania aims at becoming a hub
for the European gas market in order to solve its problems of energy security
and gain regional leverage. These projects are, however, shared by several
countries in Southeastern Europe and Turkey or Bulgaria, with South Stream
and/or Nabucco, definitely better candidates for this role," says
Bonzanni.
If you can't beat'em
Adding to the confusion are recent talks between Russia and Romania's
national gas company Romgaz about the latter participating in the Russian South
Stream project to move Russian gas under the Black Sea through the Balkans and
on to Italy. And further complicating matters, Paolo Scaroni, CEO of Italian
energy giant Eni, Gazprom's partner in the South Stream project, was quoted on
March 12 as proposing a merger of the rival projects Nabucco and South Stream
for part of the route: "We would reduce investments, operational costs and
increase overall returns."
The LNG project definitely adds to doubts about Nabucco, the viability
of which is being questioned due to the geopolitical risks it is exposed to in
terms of sourcing supplies and securing their transit. These risks range from
the recently announced Turkmenistan-China pipeline, to increasing US-Iran
tension, the many ramifications of the Armenia-Azerbaijan conflict, and the
surge in extraction of unconventional (shale) gas. Such doubts produce a vicious
circle, since weakening resolve on the part of any one participant weakens the
willingness of others to commit unconditionally. This means that, despite the
EU's unflagging enthusiasm, the project might still die the death of a thousand
doubts.
But speaking April 16 to Kyiv students and journalists, Nabucco's
adviser/lobbyist, former German foreign minister Joschka Fischer, was his usual
rambunctious self: "South Stream would go through the deep waters of the Black
Sea, and I do not see it being built." Asked from where Nabucco would get its
gas, he named the Caucasus, Central Asia, North Iraq, "...and even further
south."
Source Bne www.businessneweurope.eu