Nabucco Say It Can Go Without Turkmen Gas if Other Sources Deliver
RWE AG, the German utility and partner in the Nabucco natural-gas pipeline to Europe, has said the pipeline project may not need gas supply from Turkmenistan if present negotiations with the Kurdistan Regional Government and Azerbaijan are successful .
“if those materialize there will be no room for Turkmen gas anymore in Nabucco phase 1, the 31 billion cubic meter capacity pipeline,” Stefan Judisch, head of RWE’s supply and trading unit, said in an interview with Bloomberg. “The supply picture becomes slowly but surely clearer.”
Turkmenistan, which annually produces some 75 billion cubic meters of gas, is home to South Yolotan, the world's fourth largest gas field with estimated reserves of 4 to 18 trillion cubic meters. The country's total gas deposits contain a total of 24.6 trillion cubic meters of gas.
Turkmenistan has said that is seeking to supply its gas to Europe. In meeting with the head of the British-Turkmen industry council, the country's president Gurbanguly Berdymukhammedov said his country was modernizing its oil and gas industry and is seeking to diversify its gas exports, with a focus toward Europe.
The Turkmen president said last week his country intends to boost gas exports sevenfold, to 230 billion cubic meters of gas, including 180 billion cubic meters intended for export, by 2030.
Turkmen export volumes to Europe must be taken into account in the planning of a pipeline to transport gas from Azerbaijan’s Shah Deniz field westward across Georgia, Judisch said. The countries in the region and the six companies working on Nabucco will need a concept for gas volumes from Turkmenistan by the end of March to integrate the supplies into Nabucco, the executive said.
Russia, along with China and Iran, is a major consumer of Turkmen gas. In geo-political terms, Turkmenistan must maintain its relationship with Russia and agree with Azerbaijan on transporting gas across the disputed Caspian Sea in order to sell to Europe via Nabucco.
In late September, Turkmen president said Turkmenistan would continue to maintain a policy of strategic cooperation with Russia in the oil and gas sphere despite the negative impact of the global economic crisis on joint projects.
This week, Itera, Russia's large independent oil and gas producer, will put into operation a gas pipeline in Turkmenistan. The 198-kilometer pipeline is linking gas deposits in the Karakum Desert with the Central Asia - Center gas pipeline system running from Turkmenistan via Uzbekistan and Kazakhstan to Russia. The Central Asia - Center gas pipeline system is controlled by Russia's energy giant Gazprom. Some 3 billion cubic meters of gas are expected to be pumped via the new pipeline annually.
Russian President Dmitry Medvedev will pay a working visit to Turkmenistan on October 21-22, the Kremlin has said.
The Northern Iraq Issue
Iraq is the “most real” supplier for Nabucco as it is less dependent on Russia than Turkmenistan or Azerbaijan, Dimitar Abadjiev, head of corporate affairs at Nabucco Gas Pipeline International GmbH, said in Bucharest last month.
RWE may to reach an agreement on sourcing gas from northern Iraq before the end of the year, according to Judisch.
Germany’s second-largest utility, signed in August a cooperation agreement with the Kurdistan Regional Government to help develop the Iraqi region’s gas distribution network.
“Before any export, our gas will be used to meet the needs of the people of the Kurdistan region and neighboring areas,” KRG Prime Minister Barham Salih said in an Aug. 26 statement posted on the regional government’s website.
The Iraqi Oil Ministry responded with a statement on its website “stressing that Iraq is exporting crude oil and gas through the Iraqi oil marketing company exclusively and there is not any other party authorized to sign contracts with international companies.”
“We certainly recognize that an export can only happen if all stakeholders are happy,” Judisch said today. “We are in contact with the relevant authorities and we expect people coming to consensus on this matter soon.”
Nabucco wants to save on construction costs by leasing a Turkish pipeline owned by Botas, which runs to Diyarbakir, close to the Iraqi border, to transport gas to the main trunk of Nabucco.
The group may reach an agreement on the use of the pipe “soon,” Judisch said.
Source: Bloomberg