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Heavy blow on Nabucco â€“ ANALYTICS

Heavy blow on Nabucco <font color=red>â€“ ANALYTICS </font>

29 January 2008 09:42 (UTC +04:00)

The event, which is in the interests of Azerbaijan, can be considered one of Russiaâ€™s counterattacks in South-Eastern Europe.
Construction of South Stream means elimination of giant Nabucco discussed since 2002 from the agenda. It is not accidental that Balkan media characterizes Puntâ€™s last effort as â€œapparent deathâ€ of Nabucco project. The leading political forces started serious polemics on this theme in Romania. The opposition blames the authorities for not preparing the countryâ€™s energy strategy. But Russiaâ€™s counterattack is not restricted to Bulgaria. Soon after the Sofia agreement Serbian government also gave the green light to South Stream. The government also passed a decision on selling major stake in Serbiaâ€™s State Oil Company Naftna Industrija Srbije (NIS) to Russian Gazprom. Prime Minister of Serbia Vojislav Koshtunitsa said that the main aim of the government is to revive economy, and agreement with Russia is of great importance for achieving this goal. Actually the decision of Serbian government is based on political, not economic factors. With this step Belgrade extended political-economic relations with Russia and ensured strong support of Moscow in the issue of Kosovoâ€™s independence. Bosnia and Herzegovina is also planned to be admitted to South Stream pipeline. Gazprom officials stated that Sarajevo government has positive opinion of the issue.
And what is the main essence of South Stream project? The project signed between Gazprom and ENI in November last year cost $10bn. Annual capacity of 900-kilometer pipeline that would go under the Black Sea is expected to be 30 billion cu m of gas.
After North stream gas pipeline which will provide transportation of Russian gas to Germany is constructed on the project of the two companies Russia will raise its 25% share which it has in gas market of Europe to 40%. There will not be large place for other gas suppliers in European market.
This is not the only problem of the real rival of South stream â€“ Nabucco pipeline. The second main issue is Russian projectâ€™s taking potential gas sources of Nabucco. Europe was planning to reduce energy dependence from Russia and Near East and direct it to new source Caspian region by constructing Nabucco pipeline. But South streamâ€™s covering Middle Asia aggravated the situation. Russian largest company â€œGazpromâ€ purchases Turkmen gas (nearly 50 billion cu m a year), as well as great part of natural gas of Kazakhstan and transports it to Europe via Ukraine. Russiaâ€™s agreeing with the prices demanded by Uzbekistan and Turkmenistan for natural gas can be explained so.
Europe is not anxious at the first sight. Spokesman for European Commission Ferran Tarradellas said that Nabucco pipeline is the main priority for them. But Nabucco hopes Azerbaijan and makes efforts for becoming member of consortium established by State Oil Company of Azerbaijan Republic (SOCAR) on this pipeline. The director general of consortium Reynard Mitshek did not rule out such supposition.
â€œSOCAR representatives analyze capabilities of joining Nabucco project as a strategic partner, finance partner or supplierâ€, he said.
He said that the issue on SOCARâ€™s being 7th finance partner was discussed in the consortium.
â€œThe participants regard that it would be better if SOCAR attends consortium,â€ he said.
Nabucco pipeline will cost â‚¬5 billion and deliver Caspian gas to Central Europe.
Iranian side also stated that it will gas supplier. Iranian Foreign Minister Manouchehr Mottaki making statement in Sofia made European Union responsible for final decision. EU officials taking into account several sanctions imposed by UN against Iran, stated that pipeline did not need Iranian gas in November, 2007. Analysts consider that, though Iran takes 3rd place for gas reserves, it can not be potential gas supplier, because its infrastructure is old. Therefore, main attention was paid to Azerbaijan, Turkmenistan, Kazakhstan, Egypt and Iraq. There should be special attention to Turkmenistan which is potential gas producer .Turkmenistan intends to raise gas production to 70 million cubic meters in the future. Kazakhstan and Turkmenistanâ€™s network of pipeline develops weakly, except Russia. Though Ashgabat eliminates dependence of Russia with the help of West and new gas pipeline network develops, Turkmen authoritiesâ€™ position for Western investments is not known.
It is clear that, Nabucco faced heavy blow. US expert on region Steven Levine stated that Vladimir Putin applied plans on taking domination over European market and Asian gas for next decades.
â€œWestern politicians have got false on this issue, because, they do not struggle for future of European energy, except Putin,â€ he said.
Necessity of Westâ€™s response for gas attempt of Moscow is clear. One of these steps may be proposal of European Commission on exception t the EU competition law. The exceptions ensure Nabucco supporters to use 50 % opportunities of gas pipeline. The decision on the issue is intended to be adopted in the fist quarter of 2008. It will be clear how West will respond to Russiaâ€™s attack along the front soon. /APA Analytics /