European pipeline clears hurdle
Thomas Grove and Orhan Coskun
Published on Thursday, May. 09, 2013 12:01PM EDT Last updated on Thursday, Aug. 23, 2012 11:19AM EDT
Turkey and four European Union countries formally agreed Monday to route a new natural gas pipeline across their territories, pushing ahead with a U.S.- and EU-backed attempt to make Europe less dependent on Russian gas.
The Nabucco project can't entirely break Europe's dependence on Russian exports - it may in fact require supplies from Russia to fill its 31 billion cubic metres of capacity - but seeks rather to diversify the region's energy sources.
The prime ministers of Turkey, Austria, Bulgaria, Romania and Hungary signed a deal to allow the pipeline to cross their countries, linking Europe to gas resources in Central Asia and the Middle East.
"We have started to confound the skeptics, the unbelievers. Now that we have an agreement, I believe that this pipeline is inevitable rather than just probable," said European Commission President Jose Manuel Barroso.
Iraq, Egypt and Syria all said Monday that they were ready to contribute gas, as did Turkmenistan on Friday. To feed Nabucco, however, Turkmen gas would have to be brought across the Caspian Sea to its western shore in Azerbaijan, which said it is giving priority to the project.
"Nabucco will provide energy security to Turkey, to southeast Europe and to Central Europe. Nabucco is thus a truly European project," Mr. Barroso said. "Turkey and the EU have tackled together a common challenge: the security and diversification of their energy supplies."
Russia provides over a quarter of Europe's gas, and 80 per cent of that moves over Ukrainian pipelines. By diversifying imports and redirecting some of the Russian shipments through Nabucco, Europe could prevent a repeat of the January crisis in which all deliveries through Ukraine were suddenly cut off because of a price dispute. Still, Nabucco's impact is likely to remain small, as the volume of gas it can carry will be no more than 5 per cent of Europe's consumption.
The 3,300 kilometre projected pipeline would run from the Caspian Sea across Turkey to Austria and involves investments of $10.26-billion, according to EU data.
Moscow, meanwhile, is pushing hard for new pipelines to Europe for its own gas - the so-called Nord Stream through the Baltic Sea to Germany and South Stream through Bulgaria.
"Iraq can provide around 15 billion cubic metres for EU countries via Turkish territory," Iraq's Prime Minister Nouri Al-Maliki said through an interpreter.
Azerbaijani Energy Minister Natiq Aliev, however, refrained from any quick commitment.
"We support all directions concerning gas pipelines," Mr. Aliev said. "A certain amount of flexibility is required. It's the profitability regarding trade that is important."
Richard Morningstar, U.S. special envoy for Eurasian energy issues, said "Azerbaijan is a necessary condition to Nabucco but not necessarily sufficient."
The United States, which is backing the Nabucco project alongside the EU, said it does not object to Russia's participation but argues Iran should be excluded until it improves its ties with the West. Washington said the pipeline would "help invigorate Europe" and strengthen U.S. allies.
Morningstar and U.S. Senator Dick Lugar said Russia could possibly join the project.
"Russia can participate as a partner," he said. "We're trying to engage with Russia in the energy area. We don't want to see a zero-sum game."
Mr. Lugar said "we must explore how to improve confidence with Russia on energy."
Morningstar said if Iran co-operates over its controversial nuclear program, "then one of the benefits would be for Iran to benefit from the energy sector."
Turkish Prime Minister Recep Tayyip Erdogan said "if conditions permit, we wish to have Iranian gas as well to be exported to Europe through Nabucco."
Securing the Iranian route would require a significant political thaw and many question whether Iran's hardline Islamic leadership would be any more reliable an energy partner than Moscow.
The Nabucco would not only make Turkey an alternative energy route between Central Asia and the Middle East to Europe but could potentially enhance Turkey's hand in overcoming EU resistance to letting it join the union.
"I believe that with the arrival of the first gas - and some experts have said this will be as early as 2014 - this agreement will open to door to a new era between the EU and Turkey," Mr. Barroso said. "Gas pipes may be made of steel, but Nabucco can cement the links between our people."
Mr. Erdogan said Qatar could export liquefied natural gas to a projected facility in Turkey which can convert it and pump the gas to Europe through the Nabucco pipeline.