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EU countries sign 'historic' gas-transit deal with Turkey

Video by Katherine SPENCER


Latest update : 2009-07-13

Turkey has signed a key gas-transit agreement with four EU countries on Monday to back the long-planned Nabucco project. The 3,300-kilometre pipeline is aimed at reducing Europe's reliance on Russian gas.

AFP - Four EU countries and Turkey signed a landmark deal Monday to build a US-backed gas pipeline reducing European reliance on Russia amid lingering questions on who will supply the gas.

Prime Ministers Recep Tayyip Erdogan of Turkey, Sergey Stanishev of Bulgaria, Emil Boc of Romania, Gordon Bajnai of Hungary and Austrian Chancellor Werner Faymann inked the intergovernmental accord, a milestone in the long-delayed Nabucco project.

Erdogan hailed the deal as a "historic moment," but stressed "the job is not done with the signing -- on the contrary it just begins."

The 3,300-kilometre (2,000-mile) pipeline is planned to become operational in 2014 at an estimated cost of 7.9 billion euros (10.9 billion dollars), with a capacity to pump 31 billion cubic metres of gas from the Caspian Sea to Austria via Turkey and the Balkans, bypassing Russia.

"The more steps we take (on realising the project), the more the interest of supplier countries will grow," Erdogan said.

Azerbaijan is seen as the primary potential provider of gas for the conduit, with Turkmenistan, Iraq and Egypt also mentioned for the long term.

Erdogan said the legal framework for the construction of the pipeline would be completed once the Nabucco consortium signs separate agreements with all five participant countries within a targeted period of six months.

In a sign of the importance attached to the project, European Commission chief Jose Manuel Barroso, US special envoy for Eurasian energy Richard Morningstar and Iraqi Prime Minister Nuri al-Maliki attended the gathering.

A quarter of all natural gas used in Europe currently comes from Russia, with several southern European countries depending almost exclusively on Russian supplies.

The Nabucco projects aims to avoid a repetition of cut-offs that have disrupted supplies to Europe during the winter, with Russia being accused of using the gas as a political weapon.

"Russia is expected not to hinder directly or indirectly the Nabucco project," Bulgarian Premier Stanishev said, urging the signing of complementary deals "in the shortest possible time."

The conduit is in direct competition with Russia's South Stream project, which will carry Russian gas through Bulgaria to Western Europe under the Black Sea.

Azerbaijan insists it has enough reserves for the conduit. But last month it signed a deal to export gas to Russia starting in 2010, raising concerns among Nabucco proponents.

The project appeared to get a boost on Friday when Turkmenistan said it was prepared to supply Nabucco with gas, despite its earlier reluctance.

Erdogan said Iran and Russia might also join "when conditions allow" in the long term.

Iran's participation, however, is opposed by the European Union and the United States.

Two European banks have expressed readiness to finance the project, but analysts say securing the cost could be difficult in the global economic slowdown and uncertainty over suppliers.

The signing of the agreement has also been delayed by Turkish demands to use 15 percent of Nabucco's gas for domestic use or even for re-export.

EU officials said Ankara's concerns were to be addressed by an arrangement under which the pipeline would operate both ways, giving Turkey access to European stockpiles in times of need.

Erdogan, whose country is seeking to join the EU, said the pipeline "will elevate Turkey to a significant position" in European energy security and help boost his country's struggling membership bid.

Barroso praised Turkey's role, saying the project "could open the door to a new era in relations between Turkey and the EU, and beyond."

"What we are witnessing today is a powerful illustration of the strategic bonds between Turkey and the EU," he said.

The pipeline's shareholders are Austria's OMV, Turkey's Botas, Bulgaria's Bulgargaz, Hungary's MOL, Romania's Transgaz and Germany's RWE.

Date created : 2009-07-13