Thursday, August 5, 2010

NABUCCO Gains Support

In this week's installment of the Nabucco v. South Stream sweepstakes, it appears that the Nabucco pipeline has taken a slight lead. The Russian newspaper Kommersant reports that the European Union has worked out a plan that will allow Turkmenistan to join the Nabucco pipeline without the legal status of the Caspian Sea being finalized. The EU has created a draft document that could be used as a model for an agreement to authorize construction of a gas pipeline between Azerbaijan and Turkmenistan.
The Turkmen feed is necessary for Nabucco to be a commercial success, as Azerbaijan by itself lacks the natural gas reserves to fill the pipeline. According to Gunter Oettinger, the EU Energy Commissioner, Azerbaijan can supply most, but not all, of the gas. Azerbaijan needs gas to meet its own domestic gas demand, and to meet contracts it has signed with neighboring countries.
Turkmenistan is interested in joining with Nabucco after Russia cut its purchases of Turkmen gas, and refused to help fund construction of the Turkmenistan East-West Pipeline, according to Eurasia Oil and Gas magazine. Turkmenistan is financing construction of the pipeline itself, pledging $2 billion of its own funds. By paying for the pipeline itself, however, Turkmenistan is free to sell its gas to Nabucco instead of to Russia's rival South Stream project.
Bulgaria's Minster of Economics Traicho Traikov announced that construction of Nabucco will begin next year with the construction of a gas pipeline uniting the Bulgarian and Turkish natural gas networks. This section of the Nabucco pipeline will cost 200 million euros.
Nabucco supporters continue to look for additional sources of gas for the project. The Jamestown Foundation's Vladimir Socor reports that German Chancellor Angela Merkel and US Special Envoy for Eurasian Energy Affairs Richard Morningstar have raised with Kazakh officials the possibility of Kazakhstan becoming a gas supplier. Reportedly, Kazakhstan President Nursultan Nazarbayev told Chancellor Merkel tha Kazakhstan is ready to join the Nabucco pipeline project. According to Eurasia Oil and Gas, Nazarbayev said he had not committed to Nabucco previously because of sluggishness within the European Union. For Kazakhstan to join the project, Nazarbayev insists a pipeline must be built across the Caspian Sea, and a gas liquification plant must be built in Kazakhstan.

Dr. James J. Coyle is available to speak to your organization or at your event. Please contact him at