EU bets all on Nabucco, shrugs off South Stream

Energy Trade

The European Commission said it is not against Russia's plans to construct the South Stream pipeline, but it is not a priority for the EU since it doesn't bring new sources of supply. Instead, the Commission is determined to push ahead with its own “beacon” project - the Nabucco gas pipeline - that it hopes will transport gas to the energy-hungry bloc from different sources, including Iran.

Russian gas giant Gazprom and Italy's ENI on June 23 signed a memorandum of understanding on the South Stream project. On June 24, Russian President Vladimir Putin joined the Balkan energy forum in Zagreb where Bulgaria confirmed its interest in South Stream. And from Zagreb, Putin headed for Istanbul on June 25 to consolidate Russia's strategic interest in the Black Sea region. At the Black Sea Economic Cooperation Organization summit in Istanbul, Greek Prime Minister Kostas Karamanlis, at an unexpected meeting with Putin, also backed the project of Russia, Italy and Bulgaria and confirmed his country’s interest in it. The project excludes Turkey.

Some see South Stream - a gas pipeline from Russia to Europe across the Black Sea floor - as a threat to Nabucco. But the EU begs to differ. “This (South Stream) is not going to change at all our determination for Nabucco and in September there is going to be a conference for Nabucco in Budapest,” Commission spokesman for energy, Ferran Tarradellas Espuny, told New Europe on June 28, adding that the EU has already gotten a head start. The feasibility study has been done and the companies announced on June 27 they have over half of the capacity that will eventually be available to flow gas into Europe through Nabucco.

The EU sees Nabucco, which is not going to be finished until 2011, as a key supply route which would pump gas from Iran, Iraq, Egypt, Libya, the Caspian and even Russia via Bulgaria, Romania and Hungary to Austria. “In 2011, we hope that the situation with Iran is going to be better than it is now so we can get gas from Iran,” the energy spokesman said. The EU clearly cannot ignore Iran, which is in possession of the world's second largest gas reserves in the world and is relatively near the EU’s borders. “The Commission is not particularly against getting gas from Iran,” Tarradellas Espuny said. “The current geopolitical situation is not the best –- the European Union is very much worried about all the questions of uranium enrichment -- but we are looking for a specific solution and a compromise.” He said that a solution would first be in the interest of Iran and that the recent protests in Tehran show that the country needs to develop its rich hydrocarbon sector.

So far a key supplier for Nabucco could be Azerbaijan. Other sources for Nabucco include Iraq - if the situation in the country improves - Egypt and Libya - if plans for a new pipeline from Egypt and Libya to Syria and Jordan to the south of Turkey materialize - and even Russia through the Blue Stream.
There are a lot of “ifs” in the EU equation!

The energy spokesman acknowledged that Iran cannot be taken for granted, but even without Iranian gas there is Azeri gas. Also, the EU still has its hopes up for the Trans-Caspian gas pipeline. “The commissioner (Andris Piebalgs) is going to Turkmenistan in November so we still hope to get gas from Turkmenistan and Kazakhstan,” Tarradellas Espuny said.But Russia beat them to the punch. During Putin's energy summit with Kazakh President Nursultan Nazarbayev and Turkmen President Gurbanguly Berdymukhammedov on May 11-13, the three leaders agreed that the immediate requirements for export volumes would go through Russian exports routes. But there is room for hope for the EU. On June 25, Berdymukhammedov told a US envoy that the Trans-Caspian pipeline is one possibility for exporting Turkmen natural gas and Nazarbayev has also not ruled out Kazakh participation in the project.

Tarradellas Espuny said that although in the short term it is perfectly understandable that Kazakhstan and Turkmenistan want to sell their gas to Russia or China, in the long-term the Trans-Caspian pipeline would give them the opportunity to sell their gas to the appealing European market for a much higher price. That is if the legal issues of the Caspian Sea are solved and all the geopolitical concerns are taken into account.
That's more “ifs” in the EU equation! (

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