The Nabucco consortium has proposed a much smaller project than the originally
planned pipeline to carry Caspian natural gas to Europe, bowing to the reality
of low gas amounts available at the moment in the region and little interest by
investors, people familiar with the discussion told Dow Jones Newswires.
Nabucco's original project was a 3,900 kilometer-long pipeline running
from the eastern Turkish border with Georgia all the way to Austria, with a
capacity of 31 billion cubic meters, while the new proposal would only run
between Bulgaria and Austria and have roughly half of that capacity, the people
said. However, the original project is still officially on the table, one person
said.
The consortium--formed by German utility RWE AG (RWE.XE) and six other
European energy companies--confirmed that it is looking at different
alternatives, without giving further details.
"We are in the process to calculate several scenarios, including
different sizes in terms of capacity and length of the pipeline. However, our
preferred scenario still is the base-case and no final decisions have been made,
yet," said Christian Dolezal, spokesman for the Nabucco consortium.
The news comes in the midst of a tight battle among different pipeline
projects to bring the first gas ever from the Caspian to Europe--roughly 10 bcm
expected from Shah Deniz II, a field in the Azerbaijani area of the Caspian
basin which is being developed by a consortium including energy giant BP PLC
(BP.LN).
The issue is crucial for the European Union that is seeking to open up a
new "corridor" of gas imports across from Central Asia, in an effort to
diversify its gas supplies away from Russia, and Nabucco has long been the
European Commission's favorite project, as the EU's executive body saw it as the
best pipeline for such corridor, mainly for its size.
But experts have been questioning the real availability of enough gas in
Central Asia to fill the originally planned pipeline, as the Shah Deniz volume
would leave almost two thirds of Nabucco empty. Now, the chances of getting
additional gas from Iraq or Turkmenistan have been fading, prompting the
consortium to consider an alternative, one person explained.
"It's evident: there aren't 31 bcm," the person said.
The re-focus of Nabucco on the European bit of the transit comes as the
state-controlled oil company of Azerbaijan, Socar, and its Turkish peer Botas
are proposing to build a pipeline to carry the gas across Turkey, called TANAP.
If built, TANAP would effectively make Nabucco's original project redundant.
The consortium has been planning to build the Nabucco pipeline for
years, but doubts about their commitment to the project have recently emerged.
Last month, RWE's Chief Executive Juergen Grossmann said in an interview
that, while still keen to import Caspian gas to Europe, RWE favors options "that
keep our own financial exposure limited." The company has been badly hit by the
German retreat on nuclear power.
Nabucco is competing with a similar project called South East Europe
Pipeline designed by BP, and with two other pipeline plans that aim at carrying
the Caspian gas to Italy. The Trans Adriatic Pipeline, or TAP, is sponsored by
Statoil ASA (STO, STL.OS), the Norwegian energy giant that also has a 25.5%
stake in the Shah Deniz consortium. The other competitor is the Interconnector
Turkey-Greece-Italy, or ITGI, which is being developed by Italy's utility Edison
SpA (EDN.MI) and Greece's gas company DEPA.