The Nabucco gas pipeline was originally proposed by the USA in the period immediately after the fall of the Berlin Wall. Its goal was to reduce the dependence of Europe on Russian gas.
Ever since, Nabucco has never enjoyed the favour of Russia or its state monopoly Gazprom.
But it is difficult to say whether the EU as a whole sees Nabucco as a project of strategic importance. Germany and France, for instance, have never shown much interest in the project.
Last year, German Chancellor Angela Merkel confirmed her country's opposition to funding the flagship Nabucco gas pipeline project with European money, stressing that the problem is not financing but finding gas to feed the pipeline.
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.
More recently, Romania has also been considered by Gazprom as a prospective partner for South Stream.
The Nabucco pipeline will be fed from two separate points at Turkey's borders with Georgia and Iraq and run across Turkey, Bulgaria, Romania and Hungary to the Baumgarten gas hub in Austria. The pipeline's estimated lifespan is 50 years.
Its capacity is 38 billion cubic metres per year (bcm/year). Construction is expected to start in 2012, and the first gas could start flowing by 2015.
The consortium behind the Nabucco gas pipeline announced on 6 September that three international public banks are to start due diligence for loans of up to €4 billion. According to the consortium website, total investment in Nabucco is estimated at €7.9 billion, 70% of which will be financed through loans from financial institutions.
In summer 2010, Nabucco took another step forward by ordering engineering work for two feeder lines from Turkey to Iraq and Georgia. However, a third planned feeder line from Turkey to Iran has been put on the back-burner due to political considerations, the consortium announced.
The Economist newspaper describes Nabucco as looking like "an answer to a problem that technology and the market may already be solving".
It mentions the possibility of using compression technology to transport gas via an existing trans-Caucasus pipeline and across the Black Sea, and the Commission's push to liberalise the gas market so that pipelines may be used not only for imports but also for dispersion across the EU.
In September 2010 the Nabucco project won $5 billion in loans from the World Bank, the European Investment Bank and the European Bank for Reconstruction and Development, the newspaper notes.
In February 2011 it emerged that the pipeline would cost more and take longer to complete than originally estimated, perhaps until the end of 2015. This was due to the international tension surrounding Iran’s controversial nuclear programme. The Nabucco consortium decided to divert a stretch of the pipeline to Iraq instead, which would add a further 550km.
The European Commission has urged Nabucco and the smaller ITGI to cooperate or even merge their pipeline projects in the Southern Gas Corridor.
The beginning of the construction of the Nabucco pipeline, originally slated for 2012, has been pushed back to 2013. The consortium in charge of the pipeline claimed this was to align the Nabucco timeline with gas suppliers. However, specialised media have asserted that the delays are due to other problems, such as alleged cost overruns and the lack of agreement on the project on the part of the Hungarian government.
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.
According to the project's official website, South Stream is "aimed at strengthening European energy security" by eliminating "transit risk," as "another real step toward executing the Gazprom strategy to diversify the Russian natural gas supply routes".
Consequently, Gazprom sees South Stream not as a competitor, but as the best project under the EU's southern gas corridor.
The planned route of South Stream starts from the Pochinki compressor station on the Russian Black Sea coast. The pipeline's offshore section, which is around 900 km long and has a maximum depth in excess of 2,000m, will connect the Russian and Bulgarian coasts under the Black Sea. Italy's petroleum company Eni acts as Gazprom's partner in the construction of South Stream's offshore section.
As for the onshore section, Gazprom says that "several possible routes of the onshore section across the EU members are being currently considered".
Like Nabucco, the completion of South Stream is scheduled for 2015.
In March 2010, Italy's Eni proposed that South Stream and Nabucco should join forces in a joint cost-cutting drive. However, the idea was quickly rejected by Russia's Energy Minister Sergei Shmatko, who said South Stream was more competitive than its rival.
The Economist newspaper lists the crucial aspects of the proposed South Stream project that are currently missing: Russia's ill-run and debt-ridden gas industry has little extra capacity, it says, and Bulgaria is still furious about having its gas supplies cut off during the Russian-Ukrainian gas row in January 2009.
Turkey-Greece-Italy Interconnector (ITGI)
The Turkey-Greece-Italy Interconnector (ITGI), the downstream section of South Stream linking Greece to Italy, is a project by Italian company Edison. ITGI features the Poseidon Project: a 200km stretch of offshore pipeline across the Ionian Sea.
The Poseidon Pipeline is under development by IGI Poseidon SA, a joint venture between Edison and Greek company Depa.
In spite of its resemblance to South Stream, the promoters of ITGI are instead presenting the project as representing the 'first phase' of Nabucco.
Presuming that gas demand in Europe remains low until 2015, Edison predicts that Azerbaijan could serve as the only gas supplier from that area, via Turkey. Therefore, ITGI's promoters consider that a medium-sized pipeline is more adapted to Europe's needs than Nabucco in the medium term.
When operational in 2015, ITGI will have a transportation capacity of up to 10bcm/year.
Poseidon aside, other efforts to build ITGI include the realisation of the Interconnector Greece-Italy (IGI), which comprises a 600km pipeline through Greek territory, and the realisation of the Interconnector Greece-Bulgaria (IGB; also known as Stara Zagora-Komotini, partly financed from EU funds). The IBG will have a transportation capacity of 3-5 bcm/year and is expected to be operational by 2013.
For the rest of its route to the Caucasus, ITGI will use existing pipelines. ITGI officials admit that Russian gas could also be imported as well, through the existing Blue Stream pipeline across the Black Sea.
The project's website stresses that the EU has accepted ITGI as a Project of European Interest and included it among the Southern Gas Corridor Projects of the European Recovery Plan, with financing of €100 million.
Trans-Adriatic Pipeline (TAP)
TAP shareholders EGL of Switzerland, Norway's Statoil and E.ON Ruhrgas describe it as the shortest and most-cost-effective gas supply to Italy and European markets.
Budgeted at about €1.5 billion ($1.8 billion), the TAP project is designed to offer the shortest and cheapest way to ship Azeri gas from the Shah Deniz field to Europe.
In comparison, the Nabucco project is estimated to cost €9.7 billion. Officials have so far declined to provide an estimate for ITGI.
TAP will open a new so-called 'Southern Gas Corridor' to Europe and provide a market outlet for natural gas from the Caspian Sea and Middle East regions. The project is designed to expand transportation capacity from 10 to 20 bcm per year depending on throughput, the TAP consortium website says.
TAP will initially have a capacity of 10 billion cubic metres (bcm)/year. The pipeline's transportation capacity can be expanded to 20 bcm/year. In addition, TAP will offer an underground storage facility, which it is currently investigating in Albania, as well as reverse flow capability of up to 8.5bcm that will ensure that countries in the South East European and Balkan region will be in a position to secure the energy they require.
The TAP pipeline, 520km in length, will begin its route in the Greek city of Thessaloniki, crossing Albania before running across the bottom of the Adriatic Sea for 115km to Brindisi in Italy. TAP's offshore section links Italy to Albania, and not to Greece, as is the case for ITGI.
One of TAP's assets appears to be the fact that Statoil is a 25% resource owner at Shah Deniz.
"The TAP pipeline will be ready when Shah Deniz Phase Two starts production," Kjetil Tungland, managing director of the Trans-Adriatic Pipeline project, recently announced.
According to the Statoil website, Phase Two of Shah Deniz gas production is expected to start in 2016.
While peak production from Shah Deniz Phase One is projected at 8.6-9 billion cubic metres, gas production will be increased by another 16 billion cubic metres per year during Phase Two.
"The pipeline will not transport any Iranian gas under the current political circumstances," the TAP consortium clarified.
According to media reports, TAP is ready to discuss joining synergies with ITGI. However, its executives have provided no details as to what this co-operation might involve.
Last February TAP partnered with Plinacro Ltd., a state-owned Croatian natural gas transmission system operator, agreeing to extend the pipeline to Montenegro, Bosnia and Croatia. In April, TAP also signed an agreement with Bosnian system operator BH-Gas to expand the pipeline in that country.
In May, TAP and Montenegro signed a "Memorandum of Understanding and Cooperation" which the Montenegrin Deputy Minister of Economy Vladan Dubljevi? says "lays the foundation for the future gasification of country."
Azerbaijan-Georgia-Romania Interconnector (AGRI)
In September 2010, state-owned energy companies from Azerbaijan, Georgia and Romania signed a memorandum of understanding for a project to ship liquefied Azeri gas to their region.
The Azerbaijan-Georgia-Romania Interconnector (AGRI) was born, joining an already crowded list of projects under the so-called southern gas corridor.
A new company has been created with the initial task of organising a feasibility study and attracting funds.
On 20 September, Hungary announced it could become a shareholder in AGRI. In that case, each country would hold a 25% stake in the project.
According to reports, AGRI will be designed to transport Azerbaijani gas by pipeline to a Black Sea port in Georgia for liquefaction. Further transport will take place via tanker to the Romanian Black Sea port of Constanta. From there, the gas will be pumped through Romania's pipeline system to Hungary and on to the rest of the European market.
The project envisages the construction of a liquefaction plant for LNG exports at the Azerbaijan-owned oil export terminal of Kulevi in Georgia, as well as the construction of a terminal for importing liquefied gas to a re-gasification plant in Romania.
The president of Azerbaijan, Ilham Aliev, said that the next stages of AGRI – completing the feasibility study and raising cash – would be important and urged international financial institutions to get involved in the project.
The president of Romania, Traian Basescu, said that together with Hungary, his country would make the necessary moves for the feasibility study to be co-financed by the European Union as part of the Trans-European Energy Networks Programme.
A survey on the LNG terminal in Constanta, Romania's Black Sea port, is reportedly being finalised. Its conclusions will provide the starting point for the survey on the AGRI project, Basescu said.
Supporters of the AGRI project say it should be the quickest of the projects in the southern corridor to realise. But critics said the port of Kulevi was at "spitting distance" from breakaway Abkhazia, which is practically under Russian control. Russian troops are based there, and Russia could cause damage to the pipeline if it wanted to, critics pointed out.
A mysterious explosion at the Kulevi oil terminal was reported on 20 January by Rustavi, a Georgian media quoted by global intelligence company Stratfor. Investigations are under way.
To complete the picture, the Ukraine-backed White Stream project is worth mentioning, although doubts have been raised that it will be able to attract sufficient political support to be realised.
The idea was first presented by the Ukrainian government under former Prime Minister Yulia Tymoshenko in 2005, in the guise of building a Georgia-Ukraine-EU gas pipeline to transport Caspian gas across Georgia to Supsa, a Georgian port near Poti.
From Supsa, the pipeline would run offshore to the Romanian port of Constanta (the final route has not yet been decided upon) and supply Romania as well as European market.
The pipeline's initial capacity is estimated at 8bcm/year. At this stage, the pipeline would be supplied from the Shah Deniz gas field in Azerbaijan.
The project is promoted by London-based firm GUEU, but its supporters are currently unknown.
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Mergers or synergies possible
As the promoters of some of the projects have suggested, some of them could pool together their strongest assets and eventually merge. Some smaller projects could become the backbone of bigger projects, when the conditions allow it and if the demand for gas in Europe increases.
In February 2011 EU officials were reportedly pushing for a merger between Nabucco and ITGI, and the European Commission later confirmed that it was encouraging cooperation between projects in the Southern Gas Corridor.
A stronger role by the European Commission appears to be desired by all the project promoters, even those who least rely on EU or public funding. A special summit on the southern gas corridor took place under the Czech EU Presidency in May 2009. The event produced a Declaration but its content was as vague and the envisaged follow-up steps were inconclusive.
Without doubt, both Hungary and Poland will try to put further flesh on the southern gas corridor concept when they assume the rotating EU presidency in 2011.
Further summits are likely, but more importantly than holding meetings, EU leaders should make sure that proper preparations are made and that the Union can prove its added value in projects of strategic importance.
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