The Nabucco consortium is facing growing "doubts" and "uncertainty" from some consortium members over how to secure reliable supplies for its planned EUR7.9 billion natural gas pipeline, particularly as the project increasingly targets conflict-riven Iraq as the principal supplier, said two people familiar with the situation.
The Nabucco consortium is facing growing "doubts" and
"uncertainty" from some consortium members over how to secure reliable
supplies for its planned EUR7.9 billion natural gas pipeline, particularly as
the project increasingly targets conflict-riven Iraq as the principal supplier,
said two people familiar with the situation.
The Nabucco consortium has indicated in recent weeks that it is now focused on
securing its principal gas supply from northern
Iraq
. In a
widely quoted statement, consortium spokesman, Dimitar Abadjiev Sept. 30
described Iraqi gas as the "most real" supply.
That preference comes partly because natural gas from offshore Azerbaijani -
initially seen as the most likely first supply - is the subject of intense
competition from other competing pipelines and offers less than 10 billion
cubic meters a year. Also, Nabucco's plan to tap gas from
Turkmenistan
,
envisaged for phase two of the pipeline project, is no longer a leading option,
people familiar with the situation said.
However, some consortium members are increasingly concerned that political and
technical hurdles will prevent the Iraqi gas from being accessed. One key
reason: divisions between the Kurdish autonomous authorities and the central
government in
Baghdad
over
who controls the gas - and critically, the revenue. Because the Central Iraqi
government does not recognize energy contracts signed by the regional Kurdish
administration, Nabucco's aim to tap gas from
Northern
Iraq
depends on the passing of a highly sensitive law to clarify who
controls the reserves.
Some Nabucco members have said they would like to scale down the size of the pipeline
given the supply issues. The current plans calls for Nabucco to transport 31
billion cubic meters of gas from the Caspian and Middle Eastern regions to
central
Europe
through
Turkey
.
A spokesman for Nabucco said Friday that the consortium remains "confident
there will be enough gas to fill the pipeline," adding that no discussions
about lowering the capacity have been held.
Analysts say the pipeline project is entering a critical phase as its grandiose
vision - backed by the European Union in an effort to diversify the bloc's
heavy dependence on Russian gas - increasingly conflicts with practical
challenges.
"In some ways we're coming to realize that Nabucco is at a decision point
this year - the pipeline and the way its structured is not optimum. Frankly its
too ambitious and its too big," said Alexandros Petersen is a nonresident
senior fellow with the Atlantic Council, a
U.S.
think-tank focused on energy issues.
Despite the challenges, the Nabucco consortium - which consists of Austria's OMV
AG (OMV.VI), Germany's RWE AG (RWE.XE), Turkey's Botas, Bulgaria's Bulgarian
Energy Holding, Romania's Transgaz and Hungary's MOL Nyrt. (MOL.BU) - has also
made headway in recent months. The consortium has been holding talks with
potential buyers since last month, and on September 2 announced that top
international lenders, the European Bank for Reconstruction and Development,
the European Investment Bank and possibly the World Bank's International
Finance Corporation would sign an agreement to potentially take a senior
financing role in the project.
Riccardo Puliti, the EBRD's Managing Director for energy and natural resources,
says Nabucco has made real progress and cautions against pessimism as the
problems the pipeline faces are "natural," given its ambition and
location.
"I think at this point in the project it would be wrong to just look at
uncertainties... Nabucco involves supply contracts where there are a
multiplicity of suppliers and buyers, but from what I' m saying they remain in
a range" of possible positive and negative outcomes for Nabucco, Pulliti
said.
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