Nabucco grapples with communication issues

Pipe in the sky

Energy Commissioner Günther Oettinger has thrown his weight behind a troubleshooting effort following reports that Azerbaijan, the main supplier to the EU-favoured Nabucco gas pipeline project, is now unwilling to sell its gas to the consortium.

Reports that Western countries are accusing Azerbaijan of blocking Nabucco are untrue, Oettinger was quoted as saying by local press in Azeri capital Baku yesterday (8 June).

"No one is accusing Azerbaijan. It [the decision to join the Nabucco pipeline] will be an historical decision of Azerbaijan and we understand that time is needed to take the decision," Oettinger said.

Pipe in the sky?

The commissioner was apparently trying to douse the flames following media reports that Azerbaijan was withdrawing its support for the project. A support agreement for Nabucco was signed yesterday in Turkey by the energy ministers of the transit countries, in the absence of any representative from Azerbaijan.

The development came after a statement by Rovnag Abdullayev, president of Azeri state gas company SOCAR, who reportedly said that his country was not going to sell its gas to the Nabucco consortium.

Gas supply constitutes the biggest problem for Nabucco with Azerbaijan, identified as the primary supplier, still hesitant to join. In Turkey, various experts spoke in critical terms regarding Azerbaijan's "unproven" gas reserves. In fact Turkey is also bidding for Azeri gas, with some six billion cubic metres (bcm) expected to be bought by Ankara and 10 bcm by the EU bidders.

Adding to the confusion was a statement from a representative of German energy giant RWE, a Nabucco shareholder, who blamed British Petroleum (BP PLC), one of the companies that runs Shah Deniz II (the offshore gas field in Azerbaijan that is expected to be the main supply source for Nabucco). BP recently made public its concerns about Nabucco's viability.

The Shah Deniz II field is being developed by BP and Statoil of Norway, as well as state energy company SOCAR and some others. It is estimated to contain 1.2 trillion cubic metres of gas.

Oettinger said the EU was not trying to pressure Azerbaijan into selling its gas to Europeans and cited other gas-rich countries of interest, namely Turkmenistan and Iraq. But he repeated that Azerbaijan was the EU's "key partner" in the Southern gas corridor, while SOCAR was its main interlocutor.

The commissioner also stressed that the parties concerned had already agreed that the final decision on Nabucco would be taken in late October this year. Initially, SOCAR's decision was expected in April.

Pressure works?

In the meantime, the Azeri press announced that SOCAR had secured its participation in all three EU claimants for the Shah Deniz II field: Nabucco, TAP and ITGI (see 'Background').

"SOCAR will necessarily gain some part in this pipeline project to be a participant of transporting, know the situation from inside and have opportunity to put pressure on this project's transport policy," Elshad Nasirov, SOCAR's vice-president, was quoted as saying.

EURACTIV asked the parties concerned to to comment. A spokesperson from the TAP pipeline project said their company would welcome new partners "and in particular SOCAR".

Georgi Gotev


Dr. Friedemann Müller of the German Institute for International and Security Affairs was quoted as saying by 'News Azerbaijan', a website, that SOCAR and BP were not satisfied by Nabucco's commercial viability.

"I am aware that SOCAR has alternatives such as the Trans-Adriatic Pipeline (TAP), the Italy-Turkey-Greece Interconnector (ITGI) or the Azerbaijan-Georgia-Romania-Interconnector (AGRI). I am also aware that not only SOCAR but also BP, which supports the development of Shah Deniz II, is not satisfied with the guarantees Nabucco can give," he stated. 

"From the viewpoint of European security of natural gas supply there is a clear preference for Nabucco because of its bigger capacity, but I am aware that Nabucco has not yet been able to prove that it is a profitable project which has to do with the uncertainties about deliveries from Iraq, Turkmenistan and other suppliers," Müller said.

The German expert also said that Russia could come into play and make the bidding for the Shah Deniz gas more difficult.

"It is obvious that Russia is doing everything to keep its almost monopoly position as a natural gas supplier of Europe in future, including making offers to Azerbaijan in order to prevent it feeding Nabucco. Russia is paying an extremely high price to get South Stream on track, so it could also spend some money to buy natural gas from Azerbaijan at an attractive price," Müller warned.


The 'Southern Gas Corridor' is seen as part of a 'New Silk Road' of transport and energy links between Europe and the Caspian region.

The best-known pipeline project is Nabucco. But other similar projects, such as the Trans-Adriatic Pipeline (TAP), the Turkey-Greece-Italy Interconnector (ITGI) or the Azerbaijan-Georgia-Romania Interconnector (AGRI), all have the potential to become important elements of the Southern Gas Corridor and even call into question the future of Nabucco.

Some, like Russia's South Stream, even have the potential to become Nabucco 'killers' by making the flagship EU project irrelevant (more).


Further Reading