by Keith Richmond
The European Union has signed a groundbreaking deal with Turkey to deliver gas from countries around the Caspian basin straight to the heart of the EU. The £7.75 billion Nabucco pipeline will run from Erzurum in eastern Turkey through Ankara to Bulgaria, Romania and Hungary to Baumgarten near Vienna in Austria. The project – much talked about and long delayed since it was initially put forward in 2002 – was finally agreed this week, although it is not due to come on stream until 2014.
The pipeline has long-term strategic importance because it will reduce the dependence of EU countries for gas on Russia which has, of late, been a less than reliable supplier. Russia has played with both the price and the supply of gas to Europe, sometimes though not always as a result of rows with third parties such as Ukraine. The Nabucco pipeline will considerably weaken what many in Brussels regard as Russia’s stranglehold on the supply of gas to western Europe.
A spokesman for the project said: “The demand for gas in Europe is expected to increase considerably in the upcoming two decades. Sufficient gas reserves are available around Europe to meet this future increase in demand. The biggest challenge is how this gas can best be transported to consumers. The only region with rich gas reserves, and which is not yet connected with European markets, is the Caspian region and Middle East. Nabucco is the answer. Construction will start in 2011 and the first gas will flow in 2014.”
Partners in the pipeline project include OMV of Austria, BEH of Bulgaria, RWE of Germany, MOL of Hungary, Transgaz of Romania and Botas of Turkey. It will use the existing Botas pipeline to bring gas from eastern Turkey to Ankara. The gas will initially come from Azerbaijan, Turkmenistan and Kazakhstan and possibly, later, from Egypt, Iraq and Iran.
While Turkey, which still wants to join the EU, was determined to drive a hard bargain – and Turkey was initially demanding 15 per cent of the gas at a substantial discount – it was desperate that the talks should not fail.
The significance of this deal is that it appears to secure gas for Europe which is not dependent on the good will of the Russians – which is why the Americans have, quietly, been encouraging the project. It will also go a long way towards integrating Turkey with the EU – however much that irritates Greece.
