One of the European Union's long-term energy policy aims has been to reduce its dependence on imports of Russian gas. A large gas discovery in Iraq 's Kurdish region increases the chances that they will succeed, although big challenges remain.

U.K.-listed oil explorer Heritage Oil said Wednesday it has discovered the largest gas field in Iraq for 30 years. Investors in Heritage were none too pleased with this news--they had been hoping for oil, which is more valuable and much easier to bring to world markets. By mid-morning, the company was trading down 16.5%.

However, the discovery is good news for the Nabucco consortium--a group of European utilities and oil companies hoping to build a pipeline through Turkey that would bring natural gas from Central Asia , Iraq and possibly Iran to southern Europe .

Nabucco is not just a commercial venture, it is a play to shift the balance of power in European energy politics. If the 3,300-kilometer Nabucco is built, it will be the first major natural gas pipeline into central and eastern Europe that isn't controlled by Moscow .

This is important because the EU fears Russian control of such a large chunk of its gas supply. Several EU member states have also suffered severe winter gas supply disruptions in recent years as Russia fought with its neighbor Ukraine over transit rights.

So Nabucco has strong political backing from the European Commission, and is treated with disdain by the Kremlin.

However, the project has been dogged consistently by doubts about whether it will be able to secure sufficient gas supplies to justify the estimated $10.8 billion cost of construction.

When the Nabucco plan was first floated several years ago, Iran was seen as a potential source of supply, but worsening relations and tighter sanctions make that unlikely in the near term. Earlier this month, Azerbaijan promised gas for Nabucco, but doubts linger over whether this supply alone will be sufficient.

Iraq looks increasingly important if the pipeline is to succeed.

"Nabucco welcomes the news of a major discovery at the Miran gas field in the Kurdistan region of Iraq . The shareholders are in negotiations with potential suppliers and this will be considered a further advantage for Nabucco," said Christian Dolezal, a spokesman for the Nabucco consortium.

The Miran West discovery is significant. Heritage said the field could contain between 6.8 trillion and 9.1 trillion cubic feet of natural gas, although not all of this will be recoverable. That is enough to supply all the countries in the Nabucco consortium-- Austria , Bulgaria , Germany , Hungary , Romania and Turkey --with natural gas for more than a year.

Some members of the Nabucco consortium are already directly active in Kurdistan . The lead member of Nabucco, Austrian oil and gas company OMV, has stakes in several gas discoveries there and continues to explore.

"The Kurdish Region of Iraq offers world class opportunities for oil and gas exploration and has huge untapped reserves rivaled by very few places in the world," OMV says on its website.

OMV, or one of these companies in the consortium, may want to buy Heritage's stake in the Miran West field, said Evolution Securities analyst Richard Griffith.

However, while finding oil and gas may be geologically straightforward in the Kurdish region of Iraq , getting it out has been a nightmare. New oil discoveries that were developed and ready to export in 2009 were shut down because the Kurdish and Iraqi Baghdad governments couldn't agree on financial terms for the foreign companies operating the fields.

Production remains shut down, but should resume on February 1 following a settlement between the two governments. There is currently no established commercial framework for natural gas exports from the region.

So, big political, economic and technical hurdles remain. Nevertheless, worriers about European energy security have cause for cheer.

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