EU May Help Finance Nabucco Project

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EU May Help Finance Nabucco Project

28 January 2009By Zoltan Simon, Katarzyna Klimasinska / BloombergThe European Union may provide as much as 200 million euros ($265 million) in initial funding for the proposed Nabucco gas pipeline as the bloc steps up efforts to reduce its reliance on Russian supplies, the EU energy commissioner said Tuesday.

"I will propose tomorrow for some money to be used for southern corridors, particularly for Nabucco," EU Energy Commissioner Andris Piebalgs said at a Nabucco summit in Budapest. "It's cash, but it should be used cleverly to strengthen the ability" for the Nabucco consortium to secure loans for its infrastructure projects.

The European Investment Bank, the EU's lending arm, may finance up to 25 percent of the 7.9 billion euro pipeline, chairman Philippe Maystadt said. Hungarian Prime Minister Ferenc Gyurcsany earlier urged the EU to provide at least 200 million euros in initial financing, a figure that is "close to" the bloc's likely contribution, Piebalgs said. European governments must agree on loans and capital for Nabucco by June 30, Gyurcsany said.

Governments in the region are facing renewed calls to vary energy routes and diversify supplies after a gas-pricing dispute between Russia and Ukraine blocked shipments to the 27-nation bloc for two weeks this month. The Nabucco link would bring Caspian gas via Turkey through southeastern Europe from 2013.

"We must seriously begin to act" after a "deplorable lack of progress," said Czech Prime Minister Mirek Topolanek, whose country holds the EU's rotating presidency. "Nabucco is of paramount importance for the freedom of the continent."

The pipeline would run from the Turkish border with Georgia or Iran via Bulgaria, Romania and Hungary to Austria's Baumgarten hub. The venture, founded in 2004 and based in Vienna, is led by Austria's OMV. Partners include Budapest-based Mol, Germany's RWE, Bulgaria's Bulgargaz, Romania's Transgaz and Ankara-based Botas.

Polskie Gornictwo Naftowe I Gazownictwo, Poland's largest gas company, also plans to join the project, Gyurcsany's office said, citing a letter from Polish Prime Minister Donald Tusk.

Rivals to Nabucco include the planned Nord Stream link, which would run from Russia to Germany under the Baltic Sea, and the South Stream pipeline from Russia to Italy and Austria. Italy and Poland are also building liquefied natural gas terminals to cut their reliance on piped fuel.

Nabucco should be the preferred choice for Europe because it would reduce the continent's "high dependence" on Russia, Topolanek said. The region gets a quarter of its gas from Russia.

"The Nabucco project is not an anti-Russian project," Topolanek added. "We don't hold it against somebody, we want it for us."

Piebalgs said that pursuing the project does not rule out the realization of the South Stream venture. In addition to new pipelines, Europe must boost gas-storage capacity and improve its own pipeline connections to increase energy security, he added.

Azerbaijan, a potential supplier of gas to the pipeline, is seeking greater "integration" with the EU and is committed to a policy of gas diversification, President Ilham Aliyev said in Budapest.