Oettinger Confirms Nabucco Cost Escalations

European Union energy commissioner Guenther Oettinger has confirmed that the planned Nabucco natural gas pipeline will cost significantly more than originally estimated.

"Nabucco will cost between EUR12 billion and EUR15 billion," Oettinger said at an energy conference in Stuttgart as reported by Dow Jones.  To date, the Nabucco pipeline consortium had estimated costs at EUR7.9 billion.

In February, an assessment by BP had put the cost of Nabucco as nearing EUR 14 billion, due partly because of soaring commodity prices such as the price of iron ore, a key ingredient for steel.

This is the second setback for the European Union backed project in the past few days.

On Friday, the consortium announced a revised timeline for the gas pipeline project citing changes in the timing for gas supplies in the Caspian and Middle East regions. (Read More HERE)

This would push back the date for first gas flows through the 2,000-mile pipeline to 2017.

The combination of these two announcements will undoubtedly raise further doubts about the economic viability of the project.