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Kazakhstan: Nabucco needs 'action', not just 'talk'

Published 19 July 2010 - Updated 20 July 2010
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Kazakhstan's leader said yesterday (18 July) the European Union was doing too little to bring to life the Nabucco pipeline, which aims to take Caspian Sea gas to Europe and reduce the bloc's dependence on Russia.

"In Europe there is a lot of talk on Nabucco [...] but in reality little gets done," Nursultan Nazarbayev said at a joint news briefing with German Chancellor Angela Merkel in the Kazakh capital, adding that his comments were not criticism.

Kazakhstan remains close to Russia nearly two decades after the breakup of the Soviet Union, but energy has become a bone of contention. Its willingness to join Nabucco could hamper its relations with Russia, Europe's biggest gas supplier.

Nabucco shareholders have struggled to reach the gas supply deals they need to secure financing for around 70% of project costs for the 7.9 billion-euro, 3,300-km pipeline.

Nazarbayev added that for Kazakhstan to supply the pipeline, expected to open by end-2014, the Nabucco consortium would have to either extend the link under the Caspian Sea or set up liquefied natural gas (LNG) plants. "But nothing is happening with either of those issues besides talk," he said.

Kazakhstan, Turkmenistan, Azerbaijan and Iran are all viewed as potential suppliers for the pipeline, which is expected to carry 31 billion cubic metres a year.

Merkel, who was at the end of a five-day tour to Russia, China and Kazakhstan with the aim of boosting trade and energy supplies, said she welcomed trade with Astana.

"We'll support new business with state export guarantees," she said, referring to Germany's promise to refund exporting companies if the importing country dodges the bill.

Nazarbayev said he was disappointed so few German companies had invested in Kazakhstan and said he would welcome their involvement in the metals and chemicals sectors.

Kazakhstan is chairing the Organisation for Security and Cooperation in Europe (OSCE) for 2010 (see EurActiv 26/01/10)

 (EurActiv with Reuters.)

Positions: 

Nabucco Gas Pipeline International GmbH issued the following statement in response to the Kazakh president's declaration:

''The Nabucco project is the EU's flagship project for the transport of gas in the Southern Corridor. It is currently the only ground-breaking economic initiative for the greater diversity of gas sources and transportation routes and enhanced competition in Europe and is the most advanced project to date.

With an intergovernmental agreement – signed and ratified in all Nabucco countries - already in place, Nabucco is the only project that has this special firm legal basis. In line with the development timeline, Nabucco is currently in discussions with major banks such as the EIB, EBRD and IFC.

Gas supply contracts are being negotiated by the shareholders and there is already strong interest, confirming the positive results from the market survey, which was completed in 2008. Nabucco Gas Pipeline International GmbH isn't in a position to discuss the timing related to the signing of contracts.

All six Nabucco shareholders are committed to completing and promoting the project. Nabucco is on track and will be completed.''

Background: 

Two competing planned gas pipelines, Nabucco and South Stream, have similar timeframes for beginning and completing construction.

Gazprom-favoured South Stream is a planned natural gas pipeline bypassing Ukraine, running under the Black Sea to Bulgaria, with one branch going to Greece and Italy, and another one to Romania, Serbia, Hungary, Slovenia and Austria. Russia recently announced that it would more than double its planned capacity from 31 billion cubic metres per year (bcm/y) to 63 bcm/y (EurActiv 18/05/09 and EurActiv 25/05/09).

Another pipeline in the project phase, Nabucco, does not enjoy the favour of Russian state monopoly Gazprom. It widely resembles South Stream, but is intended to diversify the EU's pool of supplier countries, bringing gas to Europe from the Caucasus and the Middle East to a gas hub in Austria, via Turkey, Bulgaria and Romania.

The Nabucco consortium comprises leading European energy companies: OMV of Austria, MOL of Hungary, RWE of Germany, Bulgargaz of Bulgaria, Transgaz of Romania and Botas of Turkey. But three consortium members - OMV, MOL and Bulgargaz - have already signed up to Gazprom's South Stream pipeline, raising questions about potential conflicts of interest and indeed their commitment to Nabucco.

Two more gas pipeline projects are increasingly coming under the spotlight, fuelling competition in a key section of the EU's so-called 'southern gas corridor':  

  • the Trans-Adriatic Pipeline (TAP) linking Greece to Italy, 520km in length, from the Greek city of Thessaloniki, crossing Albania before running across the bottom of the Adriatic Sea for 115km to Brindisi in Italy (see EurActiv 21/05/10).
  • ITGI (Interconnection Turkey-Greece-Italy), from Azerbaijan across Georgia (the existing Baku-Tbilisi-Erzerum pipeline) and Turkey into Greece and from there into Italy, across the Ionian Sea (see EurActiv 24/04/10).

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