Ankara deal clears way for Nabucco gas pipeline

Jul 13, 2009, 14:33 GMT

Ankara/Berlin - Four European Union states plus Turkey inked an agreement Monday that paves the way for a major energy pipeline aimed at reducing Europe's reliance on Russian gas.

Turkish Prime Minister Recep Tayyip Erdogan said at the signing ceremony of the intergovernmental conference in the Turkish capital Ankara that the basis for the construction of Nabucco had now been created.

Austria, Hungary, Romania, Bulgaria and Turkey signed a legal framework agreement for the pipeline, which is tipped to cost some 7.9 billion euros (11 billion dollars), and to carry an initial load of 8 billion cubic metres of natural gas per year when it comes online in 2014, and quadruple that figure by the end of the decade.

President of the European Commission, Jose Manuel Barroso, said at the ceremony that 'Nabucco will provide energy security to Turkey, to south-east Europe, and to central Europe. Nabucco is thus truly a European project.'

Nabucco is a consortium of OMV of Austria, MOL of Hungary, Transgaz of Romania, Bulgaria's Bulgargaz, Turkey's Botas, and RWE from Germany.

The EU has pledged nearly 250 million euros to support the project.

EU states are worried that future energy disputes, such as that between Russia and Ukraine in January 2009, could further threaten the stability of Europe's energy imports.

At the ceremony, Austrian Foreign Minister Michael Spindelegger said that 'the Nabucco project is part of our insurance policy against future gas crises.'

However, few details about where the gas to supply Nabucco is eventually going to come from have yet been agreed. Currently only Azerbaijan is seen as a firm supplier, although the gas-rich Central Asian state of Turkmenistan last week indicated its interest in the project.

Backers say that the 3,300-kilometre pipeline could ultimately carry gas from Iran and Iraq.

A row over how much gas Turkey would be entitled to take from the pipeline passing through its territory seemed to have been defused on Sunday. Turkey had been insisting on a 15 per cent cut, but Turkish Energy Minister Taner Yildiz was quoted on Sunday as saying that Ankara would no longer insist on that amount.

   Turkey assumes it will receive annual income of up to 450 million euros in transit fees.

   The EU is currently promoting two other gas pipelines to lower its dependency on Russian gas, known as ITGI and White Stream.

   ITGI - Interconnector Turkey-Greece-Italy - is backed by energy firms Edison of Italy and Depa of Greece. It is to carry Caspian gas piped through Turkey 800 kilometres across Greece to Italy.

   The companies say that it should open in 2012 and carry up to 8 billion cubic metres (bcm) of gas per year. The EU has pledged 100 million euros towards a total estimated cost of 500 million euros.

   White Stream, which would carry gas under the Black Sea from Georgia to Ukraine or directly to EU member Romania, is set to carry 8 bcm as an initial load when it comes online in 2016, but is again predicted to quadruple that volume by 2030.

   Energy experts point out that all three projects face competition from Russia's Gazprom, which is currently planning its so-called South Stream pipeline directly from Russia to Austria and Italy.