Political Situation in Turkey and Economic Power of Russia Can Negatively Affect Nabucco Project Accomplishment

Political Situation in Turkey and Economic Power of Russia Can Negatively Affect Nabucco Project Accomplishment

In spite of all commercial troubles Nabucco gas pipeline can be accomplished due to political reasons rooted within the demand of Europe to assure its energy security. This is a consideration of the analysts of British Consulting Association CERA (Cambridge Energy Research Associates).

In spite of all commercial troubles Nabucco gas pipeline can be accomplished due to political reasons rooted within the demand of Europe to assure its energy security.

This is a consideration of the analysts of British Consulting Association CERA (Cambridge Energy Research Associates).

According to the report authors, there are two main political issues that can negatively affect the accomplishment of the Nabucco project: these are political situation in Turkey and economic power of Russia, the energy productivity of which keeps increasing.

In addition, the list of problems impeding Nabucco project accomplishment covers the issue of potential suppliers of gas for the pipeline including Azerbaijan, Turkmenistan, Egypt. Lately also Iraq and Iran have joined these countries.

 

> Turkey Map 
 

According to BP data, proved stocks of gas in Azerbaijan on January 1st 2008 comprised 1,28 trillion cubic meters, in Turkmenistan – 2,67 trillion cubic meters, in Egypt – 2,06 trillion cubic meters, in Iraq – 3,17 trillion cubic meters and in Iran 27,8 trillion cubic meters.

“Before the beginning of the pipeline construction, the project participants should reach an agreement on the conditions of its operation. The kind of agreement should include the terms for each transit-state and potential gas buyers, tariffs as well as agreements on security and financing”, - states the report.

The report authors think that some potential suppliers of gas for the pipeline attract definite political and economic obstacles.

Iraq, as a possible supplier of gas for Nabucco, faces the problems within security sphere. “Iraq possesses sufficient stocks of natural gas. But there are political and economic problems in the country itself. The issue of security is still the greatest risk for many projects”, - states the report.

Until now Iraq hasn’t managed to reach a consensus within the issue of investments legislation or a so-called law on oil, which is really urgent to attract foreign investments into the process of energy sector development.

“That is why Iraq most probably will be deprived of chance to export its gas by Nabucco pipeline for several years,” -considered in CERA report.

Egypt, as one of the potential gas suppliers for Nabucco, has ambitious plans to increase export of its gas. In addition, there is an interest to use Egypt gas for Nabucco pipeline through connected Pan-Arab pipeline from Egypt to Turkey that will be accomplished by 2010.

 
> Nabucco Map
 

However the report author doubts that Egypt will become a gas supplier for Nabucco in a long-term perspective. “Egypt can be involved into other pipelines. Also sufficient volume of Egypt gas is used for liquation”, - states the report.

The second country possessing the greatest reserves of natural gas in the world after Russia is Iran that has lately strived to supply its gas to Europe.

Earlier official representatives of Nabucco project have repeatedly stated that Iranian gas could be used for the pipeline in a long term perspective.

“Nevertheless, today the country is not considered as a viable source of supplies due to international sanctions, of the USA in particular, towards Teheran. These sanctions ban American companies to invest into Iran and oblige them to impose sanctions against non-American companies investing into the energy sector of the country,” – underlines the report.

The beginning of the gas pipeline Nabucco construction is planned in 2011. First supplies will start in 2014. Maximum capacity of the pipeline will comprise 31 billion cubic meters per year. The list of  project participants include Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE.
  

 
Translated from Trend Capital

 

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