EU downgrades Nabucco pipeline project

18/03/2009

The long-delayed Nabucco gas pipeline project seems to be facing new problems, as it has vanished from the list of projects that an EU economic stimulus plan would finance.

(Warsaw Business Journal, Hurriyet - 18/03/09; EurActiv, Euobserver, Dnevnik.bg, Mediapool, HotNews.ro - 17/03/09; DPA, Nine O'clock - 16/03/09)

EU officials confirmed that the pipeline, considered a flagship Union venture, had disappeared from the list of energy projects the plan will finance. [Getty Images]

Nabucco -- a 3,300km pipeline designed to carry Caspian gas to Europe via Turkey and the Balkans in order to limit EU's dependence on Russian gas -- fell off the list of energy and broadband projects that an EU stimulus plan would finance, Brussels-based EurActiv reported on Tuesday (March 17th).

EU foreign ministers discussed the 5 billion-euro plan during a meeting Monday, but failed to reach an agreement over the list of energy and broadband projects. The EU leaders are expected to decide on the list in Brussels on Thursday.

Czech Deputy Prime Minister for EU Affairs Alexander Vondra, whose country currently hold the rotating EU presidency, expressed hope Monday that EU members could reach an agreement. If so, the European Parliament can approve the stimulus plan before the end of its mandate. If not, everybody's credibility will come into question, said Vondra.

The European Commission (EC) initially proposed providing 250m euros to share the risk and help secure bank loans for Nabucco. That amount later shrank to 200m euros.

In the latest version of the project list, a broader term -- "Southern corridor" -- appears instead of Nabucco. It includes different projects in southern Europe, including a new Interconnector Turkey-Greece-Italy (ITGI) pipeline between the Greek Ionian coast and Italy.

Romanian Foreign Minister Cristian Diaconescu has warned that his country will not vote for the stimulus package if it excludes Nabucco. Romania's position has support from Austria, Poland and Slovakia, he said.

Similarly, Polish Minister for European Affairs Mikolaj Dowgielewicz said that Prime Minister Donald Tusk would try to convince EU leaders to back Nabucco to reduce the bloc's dependence on Russian gas supplies.

The agreement on the Nabucco pipeline was signed in 2002. Planners expect completion of its first phase in 2014. Once fully operational, Nabucco will ship up to 31 billion cubic metres of gas per year to Europe via Turkey, Bulgaria, Romania and Hungary.

Observers expect Azerbaijan to become the project's first gas supplier. Middle East countries may possibly join as suppliers later.

Germany, whose RWE has joined five other energy companies in the Nabucco consortium -- OMV of Austria, MOL of Hungary, Bulgargaz of Bulgaria, Transgaz of Romania and Botas of Turkey -- is one of the strongest opponents of providing European money for the project.

German Chancellor Angela Merkel recently said that the biggest problem Nabucco faced was not financing but finding gas to feed the pipeline.