This is an article from the present edition of Petroleum Economist: OMV plays down potential Gazprom involvement in Nabucco By Tom Nicholls OMV’s chief executive has played down the significance of Gazprom’s potential inclusion in the Nabucco pipeline consortium, saying the Russian gas company would end up with a minority share only. He also claimed the chances of the pipeline being built have “increased substantially”. In an interview with Petroleum Economist, Wolfgang Ruttenstorfer said the main sources of natural gas for Nabucco would be the Caspian region and the Middle East, but that Russia “should not be excluded”. And he claimed Russian involvement would not undermine the strategic purpose of the pipeline, although the EU is encouraging the project to reduce its reliance on Russia. “It’s a question of the share,” said Ruttenstorfer. For now, there is only one realistic source of gas for Nabucco: the South Caucuses Pipeline (SCP). Due to start up around the end of the year, the 690 km pipeline will export gas from Azerbaijan, through Georgia to the Turkish border – along the same corridor as the Baku-Tbilisi-Ceyhan oil pipeline. It will be supplied largely from Azerbaijan’s Shah Deniz field, in the Caspian Sea. Flows are expected to be in the region of 7bn cm/y initially, rising to around 16bn cm/y after 2012, says BP, the operator of Shah Deniz. Ultimate throughput capacity in SCP will be 20bn cubic metres a year (cm/y) and any excess, once Turkish needs are met, would be available for onward transportation. The Nabucco consortium would be “highly interested” in incremental supplies through the SCP, according to Ruttenstorfer. The infrastructure, commercial agreements and political support for flows from other sources, however, remain to be established. Theoretically, says Ruttenstorfer, they include all the countries around Turkey that have sufficient gas to export – Russia, through the under-utilised Blue Stream pipeline, Turkmenistan, Kazakhstan, Iran, Syria and Iraq. But there is no direct infrastructure to tie gas from Turkmenistan and Kazakhstan into Nabucco and there are doubts about how much spare gas Turkmenistan has. There is also no infrastructure to bring gas from Iran, Syria or Iraq to Nabucco and political circumstances are unfavourable in all three cases. However, Ruttenstorfer remains optimistic about Nabucco’s prospects, claiming that Europe’s concerns over its gas-supply security should encourage the development. “The probability of Nabucco has increased over the last year because of the supply concerns of Europe and, therefore, I think this pipeline will come.” The consortium plans to take a decision on the pipeline next year and is still targeting first gas in 2011. Nabucco’s developers are OMV, Turkey’s Botas, Hungary’s Mol, Bulgaria’s Bulgargaz and Romania’s Transgaz, each with a 20% stake. Capacity would be at least 8bn cubic metres a year (cm/y) in 2010, rising to as much as 31bn cm/y in 2020. The pipeline would originate close to Turkey’s eastern border. Half the capacity would supply countries the line crosses, with the remainder reaching a supply nexus at Baumgarten, Austria, from where the gas could enter Austrian, German and Italian markets, accounting for 9% of total European gas demand.