RWE to the Rescue for Nabucco

It seems like the Nabucco pipeline project has seven lives – every time we think it’s “dead” because of a competing Russia-backed project, it finds new life. The latest surge of optimism comes from the German company RWE, which the Financial Times is reporting has become the sixth major company to sign on to the project, which aims to bring natural gas from the Caspian region along a route free of Gazprom’s control to Europe. Now if only they could find more gas outside of Azerbaijan to fill it…. From FT:

German group to back Caspian gas pipeline By Ed Crooks in London RWE, one of Germany’s biggest energy companies, is to become the sixth company backing the proposed Nabucco pipeline to bring gas from the Caspian region to Europe, bolstering hopes for the troubled plan. RWE is expected to be formally announced as a member of the consortium at a ceremony in Vienna next week, joining the five member companies from Austria, Hungary, Romania, Bulgaria and Turkey. RWE yesterday would not confirm the reports, saying only that it had expressed its interest in Nabucco and was “very happy about these positive signals”.

Nabucco would provide an alternative source of supply to Russian gas for the European Union, bringing supplies from Azerbaijan and perhaps from Iran, Iraq, Turkmenistan and Kazakhstan. However, Gazprom, Russia’s state-controlled gas company, has been making progress with a rival pipeline, South Stream, planned to take gas from Russia under the Black Sea to Bulgaria and thence to the rest of the EU.Bulgaria last month signed up to back the project. Gazprom also took a controlling stake in NIS, a gas company in Serbia, which could be on the route of a branch of South Stream, and concluded its deal with OMV of Austria to take 50 per cent of its Baumgarten trading gas hub.That deal was controversial because OMV leads the Nabucco consortium, and Baumgarten would be where the pipeline would end. Speaking to the Financial Times last week, Wolfgang Ruttenstorfer, the chief executive of OMV, insisted that the Gazprom deal was not a barrier to Nabucco going ahead.”We have made sure in all the negotiations that Baumgarten will be 100 per cent open for Nabucco gas as for Russian gas,” he said. “Otherwise it would not have been acceptable in any way.”OMV repeated its support for Nabucco yesterday, as it made a formal notification to the European Commission of its aspiration to bid for Mol of Hungary.It said: “The combination of OMV and Mol would -contribute further to the security of energy supply for the EU, including the realisation of major infrastructure projects such as the Nabucco pipeline.”Nabucco faces other problems, not least the fear that there is not enough gas available in Azerbaijan to make the investment commercially viable.However, the involvement of a big western European energy supplier puts extra momentum behind the Nabucco plan. RWE has said it wants to invest €1bn in exploration, development and infrastructure for gas in the Caspian region.