Page last updated at 10:45 GMT, Sunday, 17 May 2009 11:45 UK

Iraq deal to revive gas pipeline

Workers on an Iraqi oil pipeline near Basra
Greater stability has helped Iraq to access its oil and gas reserves

A consortium of oil companies plans to revive a project to supply Europe with gas from northern Iraq.

Austria's OMV and Hungary's MOL have teamed up with two companies from the United Arab Emirates to extract the gas from fields in Iraq's Kurdish region.

They anticipate that supplies will be sufficient to feed the long-planned Nabucco pipeline, which proposes pumping gas to Austria via Turkey.

The pipeline would reduce Europe's dependency on gas from Russia.

The UAE's Crescent Petroleum and affiliate Dana Gas believe there is enough gas in the Khor Mor and Chemchemal gas fields they operate to supply the Nabucco pipeline after meeting immediate demand in northern Iraq and Turkey.


But Russia's Gazprom on Friday said it had signed agreements with a number of Balkan and southern European countries on the construction of a gas pipeline, South Stream, that will deliver gas to Central Europe and Italy via the Balkans.

The pipeline is in competition with Nabucco, backed by the European Union.

The proposed Nabucco route goes via Erzurum in Turkey and on through Bulgaria, Romania and Hungary to Austria. Discussions first began on the project in 2002.

OMV said production could reach a level of 3bn cubic feet per day by 2015.

"These volumes will initially satisfy the requirements of local industry with substantial quantities available for export to destinations primarily Turkey and Europe via the planned Nabucco pipeline," it said.

Iraq has the world's tenth-largest gas reserves, and the world's third largest supply of crude oil.

OMV said it will pay $350m for a 10% stake in the regional operating unit handling of the project. MOL will also take a 10% stake in the company.

Map showing Nabucco and South Stream pipeline routes

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