Nabucco ink starts to flow

The signing this week of a transit agreement to govern the Nabucco natural gas pipeline marks an important staging post in bringing to reality the long-touted energy route, which is projected to run 3,300 kilometers from the Caspian Sea region to Europe. Yet it is important to understand what such a transit agreement is intended to do – and what it is not intended to do.
Today the skepticism about Nabucco echoes almost point-for-point the skepticism surrounding the BTC a decade ago. To observe this is not to ordain that Nabucco must be built but rather to establish proper perspective. For example, although it is said that there are no committed supplies, nevertheless in June 2008 Bulgaria agreed to buy one billion cubic meters per year (bcm/y) of gas from Azerbaijan, equivalent to one-eight of the pipeline’s first-phase capacity, and over one-sixth of Bulgaria’s requirements. Yet throughput volume for the BTC pipeline had not been guaranteed at the time of the 1999 Istanbul agreements either.

The potential sources of natural gas for the Nabucco pipeline are many, some more realistic than others. Although Azerbaijan agreed to sell Russia 0.5 bcm/y of gas from the first stage of its Shah-Deniz development beginning next year, and coupled with what according to Gazprom chief Alexei Miller is a guaranteed price that other buyers would have to beat for access to the deposit’s second stage, nevertheless it is likely that some gas from Shah Deniz Two will flow through Nabucco. How much gas from Shah Deniz eventually goes to Russia will also depend in some degree upon how well Russia is able to leverage its influence over Armenia for a resolution of the Nagorno-Karabakh conflict in a manner consonant with Azerbaijan’s interests.

Asia Times