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EU, Turkey set to sign Nabucco pipeline deal

By AFP

European Union countries and Turkey are Monday to sign a key intergovernmental agreement on Europe's flagship Nabucco gas pipeline, coming a step closer to realizing a project that still lacks key suppliers.

Turkish Prime Minister Recep Tayyip Erdogan is to host the signing ceremony in Ankara for the transit deal that would link Turkey, Bulgaria, Romania, Hungary and Austria in a conduit that Europe hopes will reduce its dependence on Russian gas.

The 3,300-kilometre (2,000-mile) pipeline is expected to pump as much as 31 billion cubic metres from the Caspian Sea to Austria via Turkey and the Balkans, bypassing Russia.

It is a rival to Russia's South Stream project, developed by Russian gas giant Gazprom and Italy's Eni, which will channel Russian gas through Bulgaria to Western Europe under the Black Sea.

The Nabucco pipeline is planned to become operational in 2014 and estimated to cost 7.9 billion euros (10.9 billion dollars).

Two European banks have expressed readiness to support the project financially, but analysts say securing the cost could be difficult amid the global economic slowdown and stress that suppliers to the remain uncertain.

"Even if the necessary financing is found after some delay, there is still the big question of procurement" of gas, said Necdet Pamir, a Turkish energy expert.

But the project appeared to get a boost Friday when Turkmenistan President Gurbanguly Berdymukhamedov said his country was prepared to supply Nabucco with gas.

"Turkmenistan, consistent with the principles of diversifying its energy transport network on world markets, is considering all existing possibilities to participate in major international projects, as for example the Nabucco project," he said in a report carried by the national news agency.

In May, Turkmenistan and two other potential suppliers, Kazakhstan and Uzbekistan, held off their support to the pipeline at a meeting in Prague.

"Without these three countries, Azerbaijan will be the main provider, but it does not have sufficient gas for this project," Pamir explained.

He estimated that Baku could provide only about 4.0 billion cubic meters of gas a year to Nabucco after fulfilling its existing export commitments.

"This amount will not satisfy anyone," Pamir said.

Azerbaijan claims it has the capacity to supply Nabucco, but last month it signed an agreement to export gas to Russia starting in 2010, raising concerns among Nabucco proponents.

Iraq, Iran and Egypt are also seen as potential providers, although Pamir described their participation as "not credible."

A Turkish foreign ministry official argued that the signing of the intergovernmental agreement would "serve to boost credibility in the Nabucco project and will lead gas suppliers to think seriously about the pipeline."

Representatives from Azerbaijan, Turkmenistan, Syria and Egypt will attend Monday's ceremony as potential gas providers, said the official on condition of anonymity.

European Commission chief Jose Manuel Barroso and Richard Morningstar, the US special envoy for Eurasian energy will also participate in the event.

The signing of the agreement has been delayed several times by Turkey's demands to use 15 percent of the gas flowing through Nabucco for domestic use or even for re-export.

"It is normal for Turkey to protect its interests in such a project," a Turkish diplomat told AFP on condition of anonymity, without specifying whether Ankara's demand had been accepted or not.

"Further negotiations will be held in the future with the interested parties," he added.

The Turkish foreign ministry said this week that the Nabucco project was a top priority that it hoped would strengthen Ankara ties with the EU.

"The Nabucco project is expected to bring a new dimension to our relations, based on mutual trust and cooperation, with the European Union," a ministry statement said.

Turkey has previously threatened to back off from Nabucco if its EU accession talks were further delayed.

Since launching membership talks with the bloc in 2005, Ankara has so far opened negotiations in only 11 of the 35 policy chapters it needs to complete to become a member.

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