Turkey, EU countries sign gas pipeline deal

The 3,300-kilometer projected pipeline would run from the Caspian Sea across Turkey to Austria and involves investments of €8 billion.

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July 14, 2009 11:26
3 minute read.
Turkey, EU countries sign gas pipeline deal

nabucco signing 88 248. (photo credit: )

European countries on Monday sealed an important agreement aimed at diversifying the continent's energy sources. But their pipeline project to bring natural gas from Central Asia and the Middle East to Europe can't entirely break Russia's dominance. The Nabucco pipeline is still seeking gas supplies - in particular, from Azerbaijan - despite promising words by Iraq, Turkmenistan, Egypt and Syria. It may even need Russian supplies to fill its 31 billion cubic meters of capacity, although Moscow would be likely to be reluctant to ship gas through Nabucco as it competes with rival Russian pipeline projects running to Europe. The European Union and the United States - key backers of Nabucco - say they are confident that gas supplies will now be found after Monday's agreement signed by Turkey and four EU countries - Austria, Bulgaria, Romania and Hungary - to allow the pipeline to cross their countries. The 3,300-kilometer projected pipeline would run from the Caspian Sea across Turkey to Austria and involves investments of €8 billion ($10.26b.), according to EU data. Still, Nabucco's impact can't end Europe's need for large amounts of Russian gas, as it can carry no more than 5 percent of Europe's consumption. Moscow, meanwhile, is pushing hard for alternative pipelines to Europe for its own gas - the so-called "Nord Stream" through the Baltic Sea to Germany and the "South Stream" through Bulgaria. And there are serious political and structural obstacles ahead for Nabucco. Russia just two weeks ago clinched a new major natural gas deal with Azerbaijan to buy 500 million cubic meters of gas annually, gas that could have supplied the European effort. Azerbaijan's Energy Minister Natiq Aliev on Monday refrained from any clear commitment to Nabucco. The deal with Russia is small but reveals the influence of Moscow over former Soviet republics. "We support all directions concerning gas pipelines," Aliev said. "A certain amount of flexibility is required. It's the profitability regarding trade that is important." Turkmenistan's President Gurbanguli Berdymukhamedov on Friday signaled a desire to break Russia's lock on most of the nation's gas exports since the Soviet collapse in 1991, saying the desert nation has "colossal natural-gas reserves," and could support Nabucco. But to supply Nabucco, Turkmen gas would have to be brought across the Caspian Sea to its western shore in Azerbaijan and there is no existing pipeline. In addition, Turkmenistan and Azerbaijan disagree over Caspian Sea rights. Iraq's Prime Minister Nouri al-Maliki on Monday surprised many by saying, "Iraq can provide about 15 billion cubic meters for EU countries via Turkish territory." Two Nabucco partners are exploring northern Iraq gas fields adjacent to Turkey, but the regional Kurdish authority has to work out export details with the central government in Baghdad. Iraq also would need the construction of new pipelines through Syria and Turkey to join Nabucco. Qatar could export liquefied natural gas to a projected facility in Turkey, which can convert it and pump the gas to Europe through the Nabucco pipeline, Turkey's Prime Minister Recep Tayyip Erdogan said. Alexey Gromov, deputy director of Russia's State Institute of Energy Strategy, said Nabucco pits backers of Nabucco against Russia in a "political struggle." Russia provides over a quarter of Europe's gas, and 80% of that moves over Ukrainian pipelines. By diversifying imports and redirecting some of the Russian shipments through Nabucco, Europe could prevent a repeat of the January crisis in which all deliveries through Ukraine were suddenly cut off because of a price dispute. The United States and Turkey do not object to Russia's participation in Nabucco as a business partner, but Washington says Iran should not be included until it improves its ties with the West. The Nabucco would not only make Turkey an alternative energy route between Central Asia and the Middle East to Europe but could potentially enhance Turkey's hand in overcoming EU resistance to letting it join the European Union.


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