Nabucco suffers friendly fire from Budapest


The EU-favoured Nabucco natural gas pipeline is "in trouble," Hungarian Prime Minister Viktor Orbán said in calling for support of its competitor, Russia Gazprom-backed South Steam project.

Speaking at a public event organised yesterday (23 April) by the European Policy Centre, Orbán was asked to comment on his recent meeting with the Gazprom chief executive Alexey Miller in Budapest. Hungary is considering granting "national status" to South Stream, according to a press release.

"Nabucco is in trouble. I'm not an expert in the details, but what I have seen is that even the Hungarian company MOL is leaving the whole project," he said, speaking in English.

Orbán added that at the same time, the Russians were getting more active with their South Stream project. Both gas pipeline projects (see background) are planned to cross the Hungarian territory before reaching the Baumgarten gas hub near Vienna.

Nabucco is designed to tap other suppliers to reduce Europe's dependence on Russian natural gas.

But the Nabucco project has been under new strain since Azerbaijan, one of the expected suppliers, said its agreement would depend on Turkmenistan supplying gas as well. As the largest project among the competitors for Azeri gas, Nabucco's cost-efficiency has been raising doubts in recent months.

"The question for Hungary is very simple: whether we would like to have a South Stream which will involve in its route through Hungary, or we would like to see a South Stream running outside of the territory of Hungary," he said.

He added that "for various reasons", his government wanted South Stream to pass trough Hungarian territory.

Gazprom has been very secretive about the route of the pipeline. A Brussels promotional event for South Stream held last year was largely seen as a flop, because its representatives were unable to answer questions about the transit corridor.

The Hungarian leader sought to convince the audience that the country's energy security would not suffer even if Nabucco does not come to life.

Orbán argued  that new pipeline routes were being planned to bring gas from sources other than Russia. Despite the lack of external financing, he underscored that the priority was to build a Slovakia-Hungary pipeline. He also mentioned building links to the Croatian and Italian gas network.

"My goal is that in three years Hungary could and should say we are not dependent any more on one single-country source," he said.

Orbán commended the Russians for behaving "rationally," and added that his words carried even more weight as they came from a representative of the European centre-right, which is more concerned about Moscow's supposed hidden agenda.

Mentioning the 1956 Budapest democratic revolution, which was crushed by Soviet tanks, he noted that despite the difficult historic legacy between the two countries, the present Hungarian government was able to build a "much better relationship" with Moscow than his country had had in the past 20 years.

Recently, Bulgaria and Russia have agreed that a final investment decision on the South Stream gas pipeline will be taken in November.


Christian Dolezal, spokesperson of the Nabucco consortium has sent a statement to EURACTIV, denying the reported difficulties.


"The Nabucco Pipeline project is based on a treaty that was signed and ratified by the transit countries, including Hungary. The Intergovernmental Treaty establishes a unique and strong legal framework for lenders, producers and transportation customers. The Nabucco shareholder in Hungary is FGSZ, a MOL subsidiary, and we have not had any indication that this will change.

"The project is seeing strong progress. The Project Support Agreements were signed by all transit countries in June 2011, thus finalising the legal framework for the pipeline. In Hungary, three out of the four environmental permits have been granted. Nabucco was granted national project status in Bulgaria and in Turkey in the last few months. The Front End Engineering of the entire pipeline route is 80% finalised. The German company Bayerngas is currently negotiating  with the Nabucco consortium to become the 7th shareholder.

"On 1 October 2011, Nabucco Gas Pipeline International GmbH submitted a competitive proposal to the Shah Deniz II consortium for the transport of gas from Azerbaijan. The negotiations between the Nabucco shareholders and the Shah Deniz II Consortium for gas supply are progressing," Dolezal stated.


Asked by EURACTIV to comment Orbán's statements, Marlene Holzner, spokesperson to Energy Commissioner Günther Oettinger said that the EU executive had learned from the press that MOL wanted to leave the Nabucco consortium. But she stressed that the agreement for the transit of Nabucco trough Hungarian territory was concluded with the country's government, not with MOL.

She added that the EU was awaiting the Azerbaijan authorities' decision to which of the competing European companies to sell its gas from the Shah Deniz II field in the Caspian, adding that Nabucco was one of those.

Holzner said that for the EU, the priority was to get access to the gas from Azerbaijan trough the Southern gas corridor, which included Nabucco, "but also other projects, such as ITGI and TAP".

"All of them are a priority," she said.

Nabucco and South Stream are competing proposals with similar timeframes.

South Stream is a Russia-sponsored natural gas pipeline. As planned, the pipeline would run under the Black Sea to Bulgaria, with one branch going to Greece and Italy, and another to Romania, Serbia, Hungary, Slovenia and Austria. Its planned capacity is 63 billion cubic metres per year (bcm/y).

The key partner for Russia's Gazprom in the South Stream project is Italy's largest energy company, ENI.

Another pipeline in the project phase, Nabucco, does not enjoy the favour of Russian tate monopoly Gazprom. It 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 construction of the pipeline is expected to start in 2013 and the first gas is expected to flow in 2017. As planned, the pipeline would carry 31 bcm/y of gas.

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