Azerbaijan, Baku, April 17 / Trend , A. Badalova/
Center for European policy analysis (CEPA) analysts say despite its commercial challenges, the Nabucco pipeline could overcome the problems or be built for political reasons based on the perceived demands of European energy security.
According to report's authors, there are two additional major political issues that could negatively impact the Nabucco project. The first is the political situation in Turkey. The second major political issue is that Russia is politically and economically stronger, and its energy production has rebounded.
The issue of potential gas suppliers for the pipeline is of not small importance. Azerbaijan, Turkmenistan, Egypt, Iraq and Iran are considered to be possible suppliers.
According to BP estimations, proved reserves of Azerbaijani gas totaled 1.28 trillion cubic meters, Turkmenistan 2.67 trillion cubic meters, Egypt 2.06 trillion cubic meters, Iraq 3.17 trillion cubic meters and Iran 27.8 trillion cubic meters as of Jan. 1, 2008.
"Before the construction of Nabucco is launched, the project participants must reach agreement on terms of pipeline's operation. The agreements must include terms for each transit country and potential gas buyers, tariffs and agreements on security and financing," the report said.
The report said some potential gas suppliers have certain political and economical obstacles.
Iraq, as possible gas supplier for Nabucco, faces security problems.
"Iraq has ample supplies of natural gas. Iraq remains a country in turmoil both politically and economically. The security situation, while improved, remains extremely risky for major construction projects," the report said.
To date, Iraq has been unable to reach a consensus on an investment framework or hydrocarbon law, both of which are needed to allow foreign investment to help develop Iraq's energy sector.
"Therefore, Iraq is probably years away from being able to commit gas to Nabucco," the CEPA report said.
As to Egypt, this country has ambitious plans for increasing its gas exports, and there is interest in Egyptian gas flowing into Nabucco following the completion of the pan-Arab gas pipeline from Egypt to Turkey by 2010.
However, author of the report is suspicious whether Egypt can commit gas to Nabucco for long-term period. "Egypt may have already committed its gas to other pipelines24 and many of Egypt's gas exports are being dedicated to LNG."
Iran is a country with large gas reserves second to Russia. Ira has expressed its willingness to supply gas to Europe lately.
A number of Nabucco officials have likewise stated that Iran cannot be excluded in the long-term.
"However, the country is currently off the table as a viable supply source because of U.S. and international sanctions against Tehran - namely the Iran Sanctions Act (ISA). This law prohibits American firms from investing in Iran and calls for sanctions against non-American firms that invest in Iran's energy sector," the report said.
Construction of Nabucco gas pipeline will begin in 2011. The first supplies will be carried out in 2014. Its maximum capacity will be 31 billion cubic meters per year. Nabucco shareholders are the Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE with 16.7 percent each.
Do you have any feedback? Contact our journalist at: [email protected]