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Europe

EU backs Nabucco pipeline to get off Russian gas

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Latest update : 2009-01-27

A Budapest summit ending Tuesday pushed for the EU's Nabucco project, a gas pipeline designed to bypass Russia and the Ukraine and thereby reduce Europe's energy dependency on Moscow.

AFP - The EU-backed Nabucco project, an ambitious gas pipeline to reduce Europe's energy reliance on Russia, received a fresh push from a high-level meeting between the countries involved here Tuesday.
  
The two-day Budapest Nabucco Summit "has given the project new impetus, ending a several-year impasse," the meeting's host, Hungarian Prime Minister Ferenc Gyurcsany, told a news conference afterwards.
  
Nabucco is a 3,300-kilometre (2,050-mile) pipeline between Turkey and Austria. Costing an estimated 7.9 billion euros (10.4 billion dollars), its aim is transport up to 31 billion cubic metres of gas each year from the Caspian Sea to western Europe, bypassing Russia and Ukraine.
  
But it has been slow to get off the ground because of failure to reach agreement on key issues such as financing and where the gas would actually come from.
  
Indeed, critics argue insist that the vast project will remain nothing but a pipe dream because its backers cannot guarantee that they will ever have sufficient gas supplies to make it profitable.
  
Nevertheless, Nabucco has been put back in the spotlight following Europe's latest gas crisis, which left much of the continent cut off from the vital supplies of Russian gas they need for heating and energy.
  
Hungarian premier Gyurcsany had therefore invited government officials from Austria, Azerbaijan, Bulgaria, Egypt, Georgia, Germany, Iraq, Romania, Turkmenistan and Turkey, as well as representatives from the EU and industry to Budapest to try and inject fresh impetus into the project.
  
In a final declaration, the "producer, transit and consumer countries, international institutions and energy companies (agreed) to create the necessary political, legal, economic and financial conditions for the successful and prompt realisation of the Nabucco pipeline project."
  
The participants said they would "strongly encourage foreign direct investment ... and the transfer of know-how and technology".
  
And they would seek to "foster cooperation among the European Union, its member states, Turkey, Georgia, the countries of the Caspian Sea region and the Middle East" wiht the aim of creating "an effective energy partnership."
  
Gyurcsany had said it was up to the EU to get things moving by providing at least 300 million euros (396 million dollars) in initial investment.
  
Overall, however, Brussels should invest two billion euros in the project, he said. And the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) should provide additional financing.
  
EIB chief Philippe Maystadt said his bank was prepared to put up 25 percent, but that would be dependent on the signature of an intergovernmental agreement.
  
The text of such an agreement could be finalised by March, according to EU energy commissioner Andris Piebalgs. And Hungarian premier Gyurcsany suggested the final agreement could be signed by June.
  
Both Turkmenistan and Azerbaijan signalled their willingness to act as suppliers.
  
Austrian Economy Minister Reinhold Mitterlehner suggested the gas come from Egypt and Iran in the long term.
  
But a deal with Iran at least looks unlikely given the long-running international standoff over its disputed nuclear programme.
  
Georgia's deputy prime minister Nika Gilauri promised that his country -- which was already important as an energy hub in the region -- would be "a reliable partner for Europe in terms of being a transit country."
  
Gilauri predicted that most of the countries involved would likely sign the necessary agreements by July.
  
But as for when gas might actually start flowing through the pipeline, "that's a billion-dollar question," he told AFP.

Date created : 2009-01-27

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