Nabucco Gaining Ground

Is it time to start a 24/7 Nabucco watch? The once-doomed natural gas pipeline project, designed to bring supply from the Caspian region directly to Europe, has recently gotten some positive nudges in the right direction – but the drama is far from over. nabucco021108.jpg Today Nabucco got a positive ruling from the EU exempting Austria from competition rules regarding third party access to a section of the pipeline. Energy Commissioner Andris Piebalgs said: “The Commission decision on Nabucco shows our support for this project, which will boost Europe’s efforts to diversify our supply sources and our gas supply routes. (…) The project is important not only for the countries involved but will also contribute to strengthening competition and promoting security in gas supply for the European Union as a whole.” But the biggest news came last week with German company RWE signing on to the project, providing an unexpected boon to the economic viability of the proposal.

The stakes are high for RWE, which is looking to compete with E.ON – a company who along with Eni represent the Kremlin’s two most influential advocates in the European Union (funny how E.ON CEO Wulf Bernotat starts publicly denouncing the anti-trust authority’s attempts to proceed with unbundling after signing up with Gazprom for the Nord Stream pipeline project).Today the Financial Times is reporting that EU reps are now pressuring Turkey to sign on to the Nabucco project, indicating with more than just a wink that supporting the non-Russian controlled route would be good for their membership application: Jozias van Aartsen commented to the FT that “If they are seeking a relationship with the EU, it is one of the ways to make really clear that they do want a future relationship.“There remain two rather significant question marks over the fate of Nabucco: the participation of a major French firm, and locating enough gas supply to fill the pipe.According to Eurasia Daily Monitor, the French firm Gaz de France is very interested in getting a piece of Nabucco, and is in advanced discussions with Romania to take a stake in their section. However, despite how much the Ankara might like to please Brussels by signing on to the project, they strongly oppose the entrance of GdF because of France’s statement and conduct with regard to Armenian genocide issues – a topic we know that they take very seriously.The biggest threat to the economic viability of the project is the joint proposal by Eni and Gazprom to build the South Stream pipeline – boasting the chief advantage that they actually have gas to send through (the key disadvantage being the enormous cost of going underwater). Right now all Nabucco can count on is Azerbaijan supply, which is not enough to satisfy the capacity of the project. Further challenging the project was Turkmenistan’s recent cut-off of supply to Iran, which had a domino effect reaching all the way to Europe, proving that even a non-Russian pipeline will still carry some risk.But many people, including Stefan Judisch of RWE, subscribe to the philosophy that “if you build it, the gas will come.” Let’s hope so.