Wednesday, January 28, 2009

Nabucco summit ends with political support but uncertainty about funding

The Sofia Echo
Tue 27 Jan 2009 - Clive Leviev-Sawyer

Countries involved in the Nabucco gas pipeline project will sign a deal in June 2009 on the technical and legal aspects of the project, described in a joint declaration as a priority for the European Union, but beyond a statement by the European Investment Bank that it might put up a quarter of the money for construction of the eight billion euro scheme, how and whether Nabucco will be funded remains unclear.

At a news conference in Budapest on January 27 2009 at the close of a two-day special summit on Nabucco, held against a background of renewed urgency about alternative gas supplies for Europe after the Russia-Ukraine gas supply crisis, Hungarian prime minister Ference Gyurcsany called on the EU to provide 300 million euro in non-refundable funding.

The summit was attended by heads of state and government and economy and energy ministers from Azerbaijan, Bulgaria, Czech Republic, Iraq, Georgia, Austria, Romania, Turkey, Egypt and senior officials from Kazakhstan, Turkmenistan and the United States. Also represented were the European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD).

The consortium involved in the Nabucco gas pipeline project, which will transport gas from the Caspian region and Central Asia to Central Europe, diversifying sources and routes of gas supplies and increasing Europe’s energy independence, has approached the European Investment Bank for financing.

The gas pipeline project is a venture by Hungary’s MOL, Austria's OMV, Romania's Transgaz, Bulgaria's Bulgargaz, Turkey's Botas and Germany's RWE, which joined the established company Nabucco Gas Pipeline International that manages the project last year.

Nabucco is intended to deliver 31 billion cubic metres of gas a year from the Caspian region and the Middle East through a 3300km pipeline passing through Georgia, Turkey, Bulgarian, Romania, Hungary and Austria. The plan is for construction to start in 2011, with the first gas deliveries in 2014.

In a final declaration at the end of the summit, leaders of the countries involved reaffirmed their commitment to the project.

EIB chief Philippe Maystadt said that the EIB was prepared to consider financing up to 25 per cent of Nabucco’s construction costs, provided that a secure inter-governmental agreement on the project was achieved, but the idea of EU funding got short shrift from European Energy Commissioner Andris Piebalgs.

Piebalgs told journalists that the EU could help facilitate loans but because Nabucco was a commercial project would not finance it directly from its own funds. The project could not become a joint venture, he said.

Later on January 27, news agency Reuters reported that the European Commission would propose 3.5 billion euro of funding for energy projects in the wake of this winter's gas dispute, including about 250 million euro of funding for the planned Nabucco pipeline, according to a draft obtained by Reuters.

Media reports from Budapest said that the EBRD was prepared to consider lending for the project.

Deutsche Welle reported that EBRD president Thomas Mirow offered financial backing to the Nabucco pipeline, on the condition that it "meets the requirements of solid project financing”. The bank would need to see concrete plans and completion guarantees, besides a stable political agreement, said Mirow.

The project has got a new gloss because of its potential as an alternative to relying heavily on Russia and Ukraine. Estimates are that Nabucco could supply about five per cent of the EU’s gas needs.

Bulgarian Prime Minister Sergei Stanishev said that the Nabucco project would be a top issue at the European Council summit on March 19 and 20 2009.

Deutsche Welle said that, on the supply side, Turkmenistan and Azerbaijan both indicated they would be willing to supply some of the gas. "Azerbaijan, which is according to current plans is a transit country, could eventually serve as a supplier as well," Azerbaijani president Ilham Aliyev said.

Azerbaijan's gas reserves of about two or three trillion cubic meters would be sufficient to last "several decades," he said.

Austrian economy minister Reinhold Mitterlehner suggested that Egypt and Iran could also be brought in as suppliers in the long term.

The BBC reported that Czech prime minister Mirek Topolanek, whose country currently holds the EU presidency, insisted that Nabucco "is not an anti-Russian project".

Russia's plans for two alternative pipelines bypassing Ukraine - Nord Stream and South Stream - are well advanced.

Topolanek said the Russian pipelines would "maintain the EU's high energy dependency on Russia" and called them "a direct threat to the Nabucco project", the BBC said.

Romania’s Financiarul reported that Romania was reconfirming its commitment to the achievement of the Nabucco gas pipeline project, Romanian economy minister Adriean Videanu said on January 27 at the Budapest summit.

"Romania is reconfirming its commitment to the achievement of the Nabucco project in a context in which the Russian-Ukrainian dispute showed the vulnerability of the European states as far as their energy supply and energy resource diversification are concerned," Videanu said.

No comments: