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    Remaking Nabucco

Summary

The Nabucco consortium has reportedly come back from the drawing board with a proposal for a much smaller pipeline project between Bulgaria and Austria with a reduced capacity approximately half of what was originally planned.

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Natural Gas News, Pipelines, Nabucco/Nabucco West Pipeline

Remaking Nabucco

In an announcement that appeared increasingly inevitable to watchers of the Southern Corridor saga, the Nabucco consortium has reportedly come back from the drawing board with a proposal for a much smaller pipeline project.

Nabucco's initial vision was a 3,900 kilometer-long pipeline hosting a capacity of 31 billion cubic meters, running from the eastern Turkish border through to the Baumgarten hub in Austria.

A new proposal, would see a pipeline between Bulgaria and Austria with a reduced capacity approximately half of what was originally planned.

The consortium however, is still maintaining the viability of the original plan.

"We are in the process to calculate several scenarios, including different sizes in terms of capacity and length of the pipeline. However, our preferred scenario still is the base-case and no final decisions have been made, yet," said Christian Dolezal, spokesman for the Nabucco consortium.

Nabucco has been impacted by a series of significant setbacks recently.

An  agreement between Turkey and Azerbaijan on the development of Trans-Anatolian gas pipeline project (TANAP) to carry the gas across Turkey, effectively made Nabucco's original project redundant.

Prominent political supporters began to shift their position from their previous unwavering position of Nabucco being the favored of the pipeline proposals to carry Caspian gas to Europe.

Marlene Holzner, spokesperson for EU Energy Commissioner Guenther Oettinger, commented: "The Commission is neutral where the gas ends up in Europe and supports all pipelines in the EU, not only Nabucco but also ITGI (Interconnector Turkey-Greece-Italy) and TAP (Trans Adriatic Pipeline). "

US State Department Special Envoy on Eurasian Energy, Ambassador Richard Morningstar, said that the full implementation of the Nabucco gas pipeline becomes less probable every year.

"It became clear that it is more difficult to implement the project from the financial and temporal points of view," Morningstar commented recently , citing the continued delays in the pipeline's timetable.

Then, Nabucco consortium partner RWE AG, under financial stress after being sideswiped by Germany's shift in nuclear energy policy and the impact of expensive long-term gas contracts. said while its “fundamental approach” to the Nabucco pipeline project remained unchanged, its priority was to source gas with as little investment as possible.

But likely the deciding factor in the emergence of a smaller Nabucco is that the consortium has not been able to secure firm and significant supply agreements.

The various pipeline projects are vying to carry approximately 10 bcm of natural gas expected from Shah Deniz II field in Azerbaijan.  Even if Nabucco was successful in capturing the flow from Shah Deniz, it would still leave almost two thirds of its capacity empty. Additional sources of gas from Iraq or Turkmenistan have yet to materialize.

As many Caspian watchers have been saying, the reality is the gas supplies Nabucco requires to be viable, just arent available.