Italy’s Eni wants rival gas pipelines to collaborate

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South Stream and Nabucco, the two competing gas pipeline projects supported by Russia and the EU respectively, should combine efforts in a joint cost-cutting drive, according to Eni, an Italian oil company with a stake in South Stream.

Paolo Scaroni, chief executive officer of Eni SpA, said the move to combine the planned pipelines was "what bankers call a strategic fit," Bloomberg reported Scaroni as saying at a Cambridge Energy Research Associates conference in Houston.

"Should all partners decide to merge the two pipelines for part of the route, we would reduce investments, operational costs and increase overall returns," he added. 

Europe should promote spending on infrastructure to deliver natural gas to consumers from new sources of fuel in Africa, Turkmenistan and Kazakhstan, Scaroni said.

Europe may need to import an extra 180 billion cubic metres of natural gas annually by 2020, stretching available supplies as China, India and Pacific member states of the Organisation for Economic Development and Cooperation seek more natural gas, the Eni chief executive added. In comparison, Russia currently provides about 300 billion cubic feet of gas to Europe annually.

Discoveries of shale gas in the US have freed up supplies for the rest of the world, Scaroni said. New sources of gas from Africa, Turkmenistan and Kazakhstan would help satisfy demand in Europe if pipeline connections could transport the gas to key markets, he added.

If the two pipelines were to "partly merge" as Scaroni suggested, it appears that the stakeholders would need to chose either Romania or Serbia for a large section of the new pipe. Otherwise, it looks that Nabucco could still fulfil its design to bring to Europe gas from sources other than Russia.

Asked by EURACTIV to comment, the European Commission chose not to react at this stage.

Nabucco says no, thank you

There is no need to change the concept, the Nabucco spokesperson told EURACTIV.

“The Nabucco project is highly competitive – commercially and technically. We are fully focusing on the successful realization of the project according to the feasibility study and there is no need to change the concept. Future modifications of the overall pipeline concept or referring to the constellation of the group of joint venture partners will have to be evaluated and decided by the shareholders,' said Christian Dolezal from the Nabucco consortium.

'We never excluded any gas source and feeder line connection. The higher the gas volumes to be transported via the pipeline system the better the competitiveness due to economies of scope and of scale. That will further reduce transport cost of gas via Nabucco. Moreover we underlined repeatedly that Nabucco will contribute to cover gas supply needs for Turkey, SEE and via the Central European Gashub it will reach the whole European gas market,” Dolezal concluded.

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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 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 supply 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 conflicts of interest, or indeed their commitment to Nabucco. 

French company Electricité de France (EDF) recently signed a memorandum of understanding with Russia's Gazprom regarding its possible participation in the South Stream gas pipeline (EURACTIV 29/01/10).

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