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Nabucco may not be possible without Russia

The most critical issue related to the Nabucco pipeline, which is valued highly by Turkey for the energy security of Europe, is the location and source from where the much needed natural gas will be obtained.

One of the main aims of the Nabucco pipeline, which is planned to transport natural gas from Turkey to Austria via Bulgaria, Romania and Hungary, is to lower the dependency on Russian gas. At first, the Caspian region, Iran, Iraq and Egypt were considered strong candidates for gas procurement. However, currently the future of the pipelines including the Caspian Sea does not look too bright. Resent agreements made by Russia to carry gas from Turkmenistan and Kazakhstan have blocked Nabucco’s path.

Meanwhile, a secure Iraq in the near future also does not look possible. Although talks related to the search for a natural gas provider continue with several other countries, Russia once again seems to have grown in importance. Well aware of this situation, Austria’s largest oil-producer and refinery and gas station operator OMV took a step forward last week hoping to increase collaboration with Gazprom. During a visit to Austria by Vladimir Putin, President of the Russian Federation, Wolfgang Ruttenstorfer, CEO of OMV, and Alexey Miller, Chairman of the Board of Directors of Gazprom, signed a Memorandum of Understanding on further cooperation in the gas business.

The two companies stated their interests to work together more closely on the Central European Gas Hub at Baumgarten (CEGH) in Austria and on gas storage. In signing the memorandum on May 23, 2007, both companies said that they were seeking to strengthen the security of gas supply in Europe.

Sixth partner from Western Europe
The five shareholders of the Nabucco pipeline project include Austrian OMV, Hungarian MOL, Romanian Trangaz and Turkish BOTAŞ. French companies Gaz de France and Total and German E.ON Ruhrgas and RWE are interested in obtaining respective stakes in the pipeline. It’s possible that Russia’s Gazprom may be asked to participate in the Nabucco project. „We always stated that Gazprom, as any other company, of course is welcome to transport their gas via the Nabucco pipeline.

The sixth shareholder of the Nabucco consortium will be a European company. The idea is to strengthen and broaden the basis of the consortium with a new partner," said OMV CEO Wolfgang Ruttenstorfer in an interview with Referans business daily late last week. Turkey has a warmer approach to Gazprom being one of the Nabucco suppliers. During the „International Petroleum and Natural Gas Congress” held last week, Turkish Energy Minister Hilmi Güler said that Gazprom has not yet been offered to take part in the Nabucco project. However, „We are meeting with several countries and companies related to the topic,” Güler said.

50% quota per partner
One of the major steps in the implementation of the Nabucco pipeline project is to decide on the amount of capacity to be set-aside for the consortium partners. The details began to become clearer at the European Commission. „The shareholders group request a capacity volume of 50% equal to 15 billion cubic meters, whereas the shareholder affiliated gas traders may also participate in the open season with other Third Party Shippers,” said Rüttenstrofer.

„Therefore, the shareholders will not be strictly limited to 15 billion cubic meters and the request defined as one part of the application for exemption has been considered by the shareholders as an appropriate solution,” he added. „Let me furthermore stress the important role of Turkey in this respect. Turkey is an important bridge between the countries of the Caspian Region and the Middle East with their important oil and gas resources and Europe.

With the Nabucco pipeline in place, the country would increase its importance as an energy supply hub for Europe. Furthermore, as the Turkish gas market is rapidly growing, the Nabucco pipeline as an important supply route that will strengthen the security of Turkey’s own supply,” said Rüttenstrofer. (