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Czechs to push for Nabucco gas pipeline at EU helm

Published 16 December 2008
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The Czech EU Presidency will push for the planned Nabucco gas pipeline, which aims to reduce the Union's dependence on Russian gas, to become an EU project, the country's Prime Minister Mirek Topolanek recently announced.

The Czech Republic is among the biggest supporters of the EU's flagship gas project and has put energy security among its highest priorities. 

"This is an absolute priority. Our partners see it in the same way, and we have agreed on this at the Visegrad Four meeting," said Topolánek, quoted by the Prague Monitor. The Visegrad four of Poland, the Czech Republic, Hungary and Slovakia gathered in Warsaw on 5 November. 

Topolanek alluded to this summer's unexpected cut in oil supplies from Russia to the Czech Republic (EurActiv 31/07/08). At the time, Moscow insisted that the reductions in Russian oil deliveries to the Czech Republic were a result of technical problems, but there was widespread speculation that the cuts may have been politically motivated and linked to Prague's recent decision to host a radar that is part of the US missile shield defence system. 

"During the oil crisis this year in August, when the Russian Federation stopped supplying the agreed amount and supplies decreased by 20-30 percent, we saw that the alternative of supplies via [the oil pipelines] TAL and IKL could save us," Topolanek said. 

The Czech Republic, unlike some of its neighbours in central and eastern Europe, can cope without Russian crude oil thanks to the IKL pipeline, which was built in the 1990s and connects the country with the Western European pipeline system in Germany. 

Hungary and its private energy company MOL are also reported to be redoubling their efforts lo launch the Nabucco project. At an earlier stage, the country's prime minister Ferenc Gyurcsany called Nabucco a "distant dream", but he has since made a U-turn. Gyurcsany is now calling for a summit in Budapest to discuss the project between states and industry leaders from the Nabucco consortium countries. Possible supplier countries, transit countries and relevant international institutions would also be invited, together with the EU and the United States as political supporters of the project. 

Positions: 

Falling steel prices are also good news for Nabucco, Reinhard Mitschek, managing director of the Nabucco  venture, said recently in Vienna, quoted by Bloomberg. "Prices for steel, scrap and tubes are coming down and that overcompensates for possible higher interest payments," Mitschek said, adding: "We will revise the necessary investments next year, and there may be a positive surprise.

"The financing shouldn't be a problem despite the current crisis," Mitschek continued. "On the contrary, banks are shying away from short-term loans and are shifting to long-term infrastructure projects such as ours [...] Azerbaijan will be the main supplier in the beginning, while Turkmenistan, Russia, Iraq, Iran or Egypt could follow later," he further explained. 

"Turkey continues to pose difficulties for Nabucco," analyst Vladimir Socor  wrote in the Eurasia Daily Monitor. Socor explains: "Turkey demands, among other things, a 15 percent lift-off from the gas in transit through its territory as well as a price discount on gas delivered to Turkey from Azerbaijan. The Turkish government hopes to sign the intergovernmental agreement in Ankara in January 2009, just in time for the Nabucco Summit in Budapest to show this result. Negotiating under the pressure of a summit deadline, however, would seem to increase Turkey's leverage." 

Background: 

The Nabucco pipeline project aims to bring Caspian gas to Vienna. Azerbaijan is seen as the project's most likely first gas supplier, while in future, it would also be brought from the Middle East. Gas would be shipped via Turkey, Bulgaria, Romania and Hungary. The pipeline is scheduled to start operating in 2013, but it is not yet certain to be built. 

Continued hesitation by the private sector to finance the project, not to mention the brief war between Georgia and Russia in August 2008, means that Nabucco faces an uncertain future (EurActiv 25/08/08). Officially, the European Commission refuses to admit to any setbacks. 

Indeed, the project faces many obstacles, among which are the planned rival South Stream pipeline, supported by Russia's Gazprom. The Commission insists that Nabucco is not an attempt to find alternatives to Russian supplies, but a necessary additional channel (EurActiv 4/07/08). This position is confirmed by one of the companies central to the Nabucco project, OMV of Austria. 

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