Nabucco Speaks: “Rationale Remains Strong”
Given that last week the Shah Deniz Consortium made the announcement that it was throwing its support behind the Trans Adriatic Pipeline (TAP) instead of Interconnector Turkey-Greece-Italy (ITGI), now talk of the other Southern Corridor pipelines in the running to reach Southeast Europe is reaching a crescendo, given that a decision will likely be made next year.
In that context, Natural Gas Europe spoke to Christian Dolezal, Director of Communications and Public Affairs for the Nabucco Gas Pipeline project.
There seem to be many articles in the press and analysis pieces which say that Nabucco is dead. How do you respond?
Christian Dolezal (CD): Nabucco bears the support of the European Union and our shareholders are committed to the construction of the pipeline, and this is the only project that is based on a treaty ratified in the parliaments of the transit countries. The Intergovernmental Agreement was signed 2009 by the transit countries on a political level. This treaty enables the implementation of the project and it stands above national law. In 2011 June the Project Support Agreement, a bilateral agreement between the Nabucco companies and the ministries of each transit country, was signed establishing a harmonized legal regime for the entire route.
Given the long process of deliberations, competing pipelines and the lack of secured supplies of gas, how would you explain the mandate for building the Nabucco pipeline today?
CD: The rationale for building Nabucco remains strong and is based on the fact that Nabucco is the most economically viable and politically stable of the projects seeking to open up the Southern Corridor and is the only one which offers a genuine solution to the problem of European security of energy supply. Nabucco submitted a competitive transport proposal to the Shan Deniz II consortium in September 2011 and the Nabucco Shareholders are currently negotiating with the consortium. In terms of gas supply the Nabucco project is designed to be a multi-source pipeline, transporting gas from the Caspian region – Azerbaijan, Turkmenistan and Iraq.
Does the consortium remain committed to the original plan for Nabucco, or is it willing to settle for a "slimmed down" version? (In recent days the international media reported that the Nabucco Consortium was considering a much smaller pipeline than the original plan, which would have transported natural gas supplies from the Caspian Sea to Austria; the new proposed version would only go to Bulgaria.)
CD: Nabucco submitted a comprehensive proposal for the whole pipeline from the eastern Turkish borders to Austria. The Nabucco Shareholders and the Shah Deniz Consortium are in ongoing intensive negotiations. Our shareholders are open to discussing options that bring added value to the project but due to ongoing negotiations we cannot comment on that further.
What are the updated figures for how much the Nabucco pipeline will cost?
CD: The cost is EUR 7.9 billion and these figures are under evaluation. One thing is clear: Nabucco will be constructed as cost efficient as possible.
Some say the true competitor to Nabucco is the Trans Anatolian Pipeline (TANAP), which has guarantees of Azerbaijani gas. How do you see Nabucco's chances in competition with that?
CD: The Trans Anatolian Pipeline is currently an idea but we are in no competition. Nabucco is a fully developed project. The gas still needs an outlet to the European market and Nabucco creates a win-win situation.
Among the potentially competing pipelines, what do you think Nabucco's most viable competitor is?
CD: Nabucco submitted a very competitive proposal to the Shah Deniz Consortium and does not comment on the viability of other projects.
How have natural gas interconnector projects changed the necessity for pipeline projects in Europe?
CD: The clear advantage of Nabucco in comparison to the interconnector projects is that it means one transit regime and one tariff for the whole pipeline route although crossing five borders. Nabucco is a large pipeline system and is therefore able to operate under the principles of economies of scale. In other words, Nabucco is planned to deliver the highest possible throughput with the most efficient cost structure. Small-scaled pipelines have, compared to Nabucco, a competitive disadvantage because they are in relative figures more expensive as their size does not allow economies of scale.
How would you rate Nabucco's chances for receiving gas from Azerbaijan's Shah Deniz gas field?
CD: The chances are very good because Nabucco is the best and most feasible project.
Meanwhile, in terms of other gas sources for the pipeline, Mr. Dolezal recently pointed out the potential of sourcing natural gas from Northern Iraq.
The Chief Executive of Austria’s OMV AG (one of the main shareholders in the Nabucco project), Gerhard Roiss said in recent days he believed the Shah Deniz Consortium would decide on its pipeline partner in mid 2013. Reuters reported that Mr. Roiss said he was open to combining Nabucco with other projects like the Trans Anatolian Pipeline (TANAP), which could significantly cut the costs of constructing Nabucco.