The Future Will Not Depend On RWE
While it increasingly appears that German energy giant RWE might quit the Nabucco Pipeline project, Russia has started the South Stream Pipeline already. At Friday's ceremony in Anapa, down at the Black Sea, the Russians won a battle. If they will win the war as well, will not depend on RWE.
Gazprom, holding 50 percent of the shares of South Stream, expects the first gas to flow in late 2015 or early 2016. Together with Eni from Italy (20%), Wintershall from Germany (15%) and EDF from France (15%), Russia intends to transmit gas via Bulgaria, Serbia, Bosnia- Herzegovina, Macedonia, Hungary and Slovenia to Italy. This means, South Stream will be a Russian pipeline delivering gas from West Siberia to Europe, without involving Ukraine.
Currently, Europe ́s annual need of gas is about 500 billion cubic me- ters (bcma). According to Guenther Oettinger, Commissioner for Energy at the European Commission, there will be a demand of at least 600 bcma in future. At present, Europe gets 35 percent of its gas from Russia. The intention of leading Caspian gas to Europe is to meet the increasing demand there, and to become more independent from Russia.
As it seems, it may be the Trans Anatolian Pipeline (TANAP) to bring the Caspian gas to the western border of Turkey. Now the Shah Deniz consortium in Azerbaijan has to decide, if it will be either the Nabucco Gas Pipeline or the Trans Adriatic Pipeline (TAP) which will transmit the gas to Europe. Or to be more precise: Shah Deniz will de- cide on the so called Southern Gas Corridor in June 2013.
As Shah Deniz confirmed, either Nabucco or TAP may get ten bcma, starting in October 2018. But at the 2012 Frankfurt Gas Forum, Oettinger named this amount as “peanuts” already. As he said, 1.8 per- cent of Europe ́s demand is not worth to get a discussion with Vladimir Putin. Instead, Shah Deniz should provide at least 30 bcma in the near future.
At the 2012 Frankfurt Gas Forum, several speakers mentioned remaining risks, such as timing and economics, and having a concept that is com- pletely different to former projects: Usually, it is the producer and not the customer who takes care of the transport. Now that there are these rumors, the statement of RWE appears in a different light.
But: If RWE quits and OMV takes over the shares instead, it just means that one partner needs to spend his money on other projects instead. The critical point is not if one of the investors will leave, but if
Azerbaijan will stick to its plans to sell the Caspian gas to Europe directly. Or, if Shah Deniz will decide to sell its gas to Gazprom and bring it to Europe via South Stream instead.
In Frankfurt, Ambassador Roland Kobia, Head of the Delegation of the EU to the Republic of Azerbaijan, saw the most critical point in the timing of the project. And he is right: If there is a chance for Shah Deniz to sell the Caspian gas earlier than in 2018, they may decide to give it to Russia in 2015 or 2016.
The ceremony on Friday does not mean that Russia will win this war. They just won a battle. But if Europe will get gas via the Southern Gas Corridor or via South Stream, will not depend on RWE. It will depend on Azerbaijan: If they should decide to give their gas to Gazprom, Europe might depend on Russia even more than today.