Global Economics

Turkey to O.K. Nabucco Gas Pipeline


The geographically vital Eurasian nation will sign an agreement July 13 permitting the planned 2,000-mile long Nabucco pipeline to transit its territory

Turkey will host the signing of an inter-governmental agreement on the EU-backed Nabucco gas pipeline on 13 July, in a major breakthrough for the long-delayed project aimed at reducing Europe's gas reliance on Russia.

"I can confirm that the European Commission has received an invitation to the signing ceremony of the inter-governmental agreement on the Nabucco pipeline on 13 July in Ankara," commission spokesman Ferran Tarradellas said at a press conference on Friday (3 July).

The 13 July transit deal will secure the legal basis and conditions for the use of the pipeline crossing EU candidate country Turkey and member states Bulgaria, Romania, Hungary and Austria. The 3,300 km long pipe is designed to bring natural gas to Europe from Azerbaijan and potentially Turkmenistan, Iraq or even Iran at a later stage. Currently, several eastern and central European countries import up to 100 percent of their gas consumption from Russia.

The project, first put forward in 2002, has so far developed at a steady pace, amid strong criticism from Russia, who wants to protect its monopoly on the transport and trading of Caspian gas from its former Soviet republics.

Turkey's hard bargaining on the details of the transit deal was so far the other big stumbling block in the development of the project, with Ankara's conditions also seen as putting pressure on the EU to speed up its accession process.

One of the claims mentioned in various press reports was for Turkey to get 15 percent of the envisaged pipeline capacity of 30 billion cubic metres a year for internal consumption or re-export.

Turkey's security of supplies has been taken into account in the document draft, but precise figures have not been finalised yet, sources familiar with the matter told EUobserver.

"Nabucco should be seen as a matter of energy security for Turkey, not just the EU, since Turkey imports 65 percent of its gas consumption from Russia," Alan Riley, an energy expert from City Law School of London told this website.

Neither Mr Taradellas nor the Nabucco consortium wanted to give details on the 15 percent clause, until the agreement has been signed.

"The agreement was agreed between the member states Nabucco is going to cross and Turkey, based on the principles of mutual solidarity, equality and interdependence," Mr Taradellas said.

For its part, the Nabucco consortium, consisting of gas companies from the five countries concerned plus Germany's energy giant RWE is eagerly awaiting the legal agreement to be signed.

"We strongly welcome a signing in July, because the inter-governmental agreement is an important milestone for the Nabucco project," Christian Dolezal, spokesman for the multinational consortium told this website. "This would create the necessary legal framework for the successful continuation of the project."

Once signed, the agreement would allow companies to bid for pipeline capacity and to sign long-term contracts with the Nabucco consortium. Construction is set to begin in 2011, if the final investment decision is taken early 2010.

The agreement would also unblock €200 million earmarked for Nabucco by the EU commission as part of a €5 billion economic recovery package to be used in 2009 and 2010. The total cost of Nabucco is currently estimated at €7.9 billion.

Fischer vs. Schroder

The signing of the transit deal would be a first success for former German foreign minister Joschka Fischer, recently employed by the consortium to lobby for the project. His ties with the Turkish leadership are seen as essential in bringing the project forward, as Mr Fischer has been a constant advocate of Ankara's EU bid.

The Green politician is also a former coalition ally of ex-chancellor Gerhard Schroder, employed by Nabucco rival Gazprom (GAZP.RTS) to lobby for another pipeline, Nord Stream, designed to bring more Russian gas directly to Germany via the Baltic Sea.

Mr Schroder denied rivalry with his former foreign minister. "Welcome to the club," he said on Tuesday in Berlin, noting that "professional life" was important when political life was over.

According to German media, Mr Fischer has signed for a six-digit salary. Unlike Mr Schroder, who signed the Nord Stream deal with the then Russian president Vladimir Putin just weeks before ending his mandate, there was no direct link between Mr Fischer's political decisions and his current activities for Nabucco.

Provided by EUobserver—For the latest EU related news

Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus