Nabucco not concerned over losing Turkmen gas

Oil&Gas Materials 19 December 2009 18:58 (UTC +04:00)

Azerbaijan, Baku, December 19 / Trend , A.Badalova /

Following the policy of diversification of gas export routes, Turkmenistan gained a new buyer of its fuel. It is not Europe, but China. According to experts, as well as the EU itself, establishing a gas pipeline from Turkmenistan to China can seriously affect the plans to implement the EU-supported Nabucco project, which envisages supplying gas from the Caspian region and the Middle East to European countries. ITAR-TASS reported with reference to a source at the European Commission, who requested anonymity, that the new pipeline will bring great harms to the Nabucco project. According to the source, the EU clearly missed time to gain access to Turkmen gas.

The pipeline from Turkmenistan to China, which envisages transporting Turkmen gas through Uzbekistan and Kazakhstan, was launched on 12 December. Initial deliveries of the pipeline will be 13 billion cubic meters of gas, and by the end of 2013 the volume will be increased to 30 billion cubic meters per year.

Turkmenistan is considered as one of the gas suppliers for the Nabucco pipeline. The importance of this country for this project has been stated repeatedly. So, according to Director General of Foreign Economic Relations Department of the Federal Ministry of Economics of Austria, which is one of six members of the project, Johann Sachs, Turkmenistan assumes great significance for the Nabucco pipeline project, particularly for the OMV Company (operator of the project).

Despite Turkmenistan's interest to export gas to the European market, the country's participation to the Nabucco project is still doubtful. Until recently, the main buyer of Turkmen gas was Russia. But after the explosion on the Turkmen section of Central Asia-Center gas pipeline, the differences between the two countries aggravated and the gas supply to Russia was suspended. This event even more forced Turkmenistan to seek new export routes for its gas. China represents an attractive market in terms of growing demand for fuel. During the world economic crisis the country demonstrates significant growth. The level of GDP growth in the third quarter of 2009 amounted to 8.9 percent. On the backdrop of high economic growth, a significant increase in gas consumption was recorded in the country. According to data provided by BP, in 2008 the gas demand in China rose by 15.8 percent to 80.7 billion cubic meters.  

Despite the increasing demand for Turkmen gas, the Nabucco project consortium is not particularly concerned by the risk of losing a source to fill its pipeline. Official representative of the Nabucco project, Christian Dolezal, believes that launching a new gas pipeline from Turkmenistan to China will not affect Nabucco, particularly the future gas supplies for the project.

"We believe that Turkmenistan has enough capacity to export gas to Europe through the Nabucco pipeline. In addition, we are confident that the diversification strategy of Turkmenistan includes this option," Dolezal told Trend via e-mail.

This opinion is justified. Turkmenistan is the fourth largest in the world for its natural gas reserves after Russia, Iran and Qatar. According to BP, the proven gas reserves in Turkmenistan as of the beginning of 2009 amounted to 7.94 trillion cubic meters, accounting for 4.3 percent of world reserves. Gas production in the country in 2008 amounted to 66.1 billion cubic meters, which is 0.7 percent more than production in 2007.

Moreover, at the first stage of the realization of the Nabucco project, the main suppliers of gas are considered Azerbaijan and Iraq, where it is expected to receive a total of 16 billion cubic meters of gas per year. Turkmen fuel is planned to be used later in order to increase the capacity of the pipeline to 31 billion cubic meters per year.

Moreover, Turkmenistan has a contract with the German energy concern RWE (one of the shareholders of the Nabucco project), envisaging exploration and development of Block-23 in the Turkmen section of the Caspian Sea. Hydrocarbons obtained here can be used to fill the Nabucco pipeline.

Given the interest of Turkmenistan to diversify export routes, as well as the country's desire to move away from Russia, the European direction of gas supplies, exactly the southern corridor, particularly Nabucco project, is likely to be supported by the country. The only question is whether this pipeline will be built.

The Nabucco project worth 7.9 billion euro will deliver gas from the Caspian region and Middle East to the EU by 2014. Construction of the pipeline is expected to begin in 2011. 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.

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