US says South Stream and Nabucco could merge

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Two major pipeline projects that have so far been considered rivals, the EU-favoured Nabucco and Gazprom's South Stream, may merge, US Ambassador to Italy David Thorne told Italian daily La Stampa in an interview published today (10 January).

Thorne downplayed revelations by WikiLeaks in early December, in which US diplomats said that Italian Prime Minister Silvio Berlusconi may have personally profited from energy deals between Italy and Russia.

"We are much less worried about the alleged closeness between Berlusconi and Russian Prime Minister Vladimir Putin," Thorne said, explaining that ''Italy has been a strong promoter of rapprochement with Russia, and that is the position of [US President Barack] Obama".

"There has been progress with Russia which has improved the atmosphere,'' Thorne added.

Asked if the same was true for ties with Italian energy giant ENI, which is an important shareholder in the South Stream pipeline project (see 'Background'), Thorne said: ''Yes, because there have been many meetings with [ENI's CEO] Paolo Scaroni in Rome and in Washington. ENI has changed its approach, favouring a merge under the South Stream and Nabucco pipelines. I would say that we are in a constructive phase'.'

Last week, José Manuel Barroso, president of the European Commission, said he would be visiting Azerbaijan and Turkmenistan in the course of this week.

Azerbaijan is currently carrying out negotiations ahead of selecting in April a client or clients to access ten billion cubic metres (bcm) of Azeri gas in the Shah Deniz II field. The Nabucco consortium is one of the bidders, alongside other projects such as ITGI and TAP (see EURACTIV LinksDossier on the Southern Gas Corridor).

The Nabucco gas pipeline was originally proposed by the USA in the period immediately after the fall of the Berlin Wall. It is seen as a political project whose goal is to reduce Europe's dependence on Russian gas.

South Stream is also a political project, designed to bypass Ukraine by running under the Black Sea to Bulgaria. From there, one branch will go to Greece and Italy, and another one will supply Romania, Serbia, Hungary, Slovenia and Austria.

According to the project's official website, South Stream is "aimed at strengthening European energy security" by eliminating "transit risk," and is "another real step toward executing Gazprom's strategy to diversify Russian natural gas supply routes".

Asked by EURACTIV to comment on the news from Rome, Marlene Holzner, spokesperson for Energy Commissioner Günter Oettinger, said Nabucco and projects under the Southern Gas Corridor remained  an EU priority, as they help diversify the bloc's sources of supply.

Asked whether the Commission was familiar with the idea of merging Nabucco and South Stream, Holzner said that there were many projects on the table, "including ideas about merging different projects".

But she said the Commission was "not discussing meging Nabucco and South Stream at the moment".

Asked by EURACTIV to comment, the Nabucco consortium sent the following statement:

“There are no considerations on the part of the consortium in this regard. Nabucco is on its own a very competitive project.”

The South Stream press service was also asked to comment, but no reply has been received.

 

Nabucco and South Stream are seen as competing projects and have similar timeframes for beginning and completing construction.

South Stream is a Russia-sponsored planned natural gas pipeline. Once completed, the pipeline will run under the Black Sea to Bulgaria, with one branch going to Greece and Italy, and another to Romania, Serbia, Hungary, Slovenia and Austria. Russia announced that it would more than double its planned capacity from 31 billion cubic metres per year (bcm/y) to 63 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 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 construction of the pipeline is expected to start in 2011 and the first gas is expected to flow in 2014. The pipeline will carry 31 billion cubic metres of gas per year, but this maximum capacity will only be reached in 2018. Investment in the pipeline totals 7.9 billion euros.

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

  • 13-14 Jan.: Commission President José Manuel Barroso and Energy Commissioner Günter Oettinger to visit Azerbaijan and Turkmenistan.

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