Page last updated at 17:56 GMT, Tuesday, 27 January 2009

EU pipeline scheme gains momentum

Turkish gas control centre west of Ankara, 7 Jan 09
Turkey expects to be a major player in the Nabucco project

Central and southern European leaders have voiced strong backing for a major pipeline project that could reduce EU reliance on Russia for gas.

But the talks in the Hungarian capital Budapest did not result in a pledge of direct financing for the 3,300km (2,050-mile) Nabucco gas pipeline.

Nabucco would bring Central Asian gas to western Europe via Turkey and the Balkans, bypassing Russia.

It is expected to account for no more than 5% of EU gas needs.

The Budapest meeting followed serious disruption to European gas supplies during Russia's recent dispute with Ukraine.

Russian energy muscle

Czech Prime Minister Mirek Topolanek, whose country currently holds the EU presidency, insisted that Nabucco "is not an anti-Russian project".

Russia's plans for two alternative pipelines bypassing Ukraine - Nord Stream and South Stream - are well advanced.

Mr Topolanek said the Russian pipelines would "maintain the EU's high energy dependency on Russia" and called them "a direct threat to the Nabucco project".

Work is scheduled to start on Nabucco in 2011, with the first gas deliveries expected in 2014.

The major sources of gas for Nabucco are expected to be Azerbaijan, Kazakhstan and Turkmenistan.

But Mr Topolanek said "we should also ask ourselves whether we are capable of reaching an agreement with Iran on gas supplies for Nabucco".

The EU said it could not go beyond offering loans and credit guarantees for the pipeline, which is expected to cost about 10bn euros (£9bn; $12bn). It is planned to supply up to 31bn cubic metres of gas annually.

EU Energy Commissioner Andris Piebalgs, quoted by Reuters news agency, said the commission would avoid a bigger commitment to Nabucco "because then it's not anymore the consortium's project but a public-private partnership and I'm not ready at this stage to even consider such a type of option".

The consortium is led by Austria's OMV, and includes MOL of Hungary, Romania's Transgaz, Bulgargaz, Turkey's Botas and RWE of Germany.

The European Bank for Reconstruction and Development says it is ready to consider contributing to the project.

When complete, Nabucco will extend from an Austrian hub at Baumgarten to Turkey's eastern borders with Iran and Georgia.

Map showing Nabucco and South Stream pipeline routes

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