Gazprom is welcome to pipe gas through Nabucco

Jun 26, 2007 02:00 AM

The planned Nabucco gas pipeline intended to snake through southern Europe and bypass Russia may well carry gas produced by Russia's state-run gas monopoly Gazprom, a senior executive confirmed.
The future of the Nabucco project has been called into question thanks to a proposed pipeline by Russia called South Stream, which would take Caspian Sea gas through the Balkans and then split into two to reach Hungary and Italy. Also, Nabucco has been plunged into doubt because gas is yet to be sourced.

Speaking on the sidelines of an energy security conference hosted by Cambridge Energy Resources Associates here, Johann Gallistl, vice president of Nabucco Gas Pipeline International, sounded an upbeat note when he said companies will be invited to book capacity in the pipeline in the third quarter of this year.
Nabucco, which would enable Europe to buy gas from the Caspian region, is supported by Austria's OMV, Bulgaria's Bulgargaz, Hungary's MOL, Romania's Transgaz and Turkey's BOTAS, and the consortium is looking for a sixth partner to share the EUR 5 bn cost.

The capacity booking process will take five months, with the shareholders of the pipeline and their affiliates given the opportunity to book up to 15 bn cmpd. Any unfilled space will be added to the remaining 16 bn cm and offered to other shippers.
"We have signed letters of intent with up to eight shippers who want to book capacity in the pipeline," Gallistl said.

Russia will also be allowed to book space during the open season, Gallistl said.
"Russia has never been offered to become a shareholder in the consortium. But as a shipper, we offer third party access, so we welcome Gazprom" and its participation, Gallistl added. Gallistl said that Russia's competing pipeline had no impact on Nabucco: "We have a time schedule and we are following it. South Stream has no influence on it."

The company is in the process of establishing each of the national Nabucco companies, to be finalized in the coming weeks. A sixth member of theconsortium is also to be chosen, with prospective companies including Gaz de France and German energy utility RWE.
"This will be done by the third quarter. But there is no pressure," Gallistl said.

Estimated to cost EUR 5 bn, a final investment decision on Nabucco will be taken at the beginning of next year after which the company will choose the lenders for the project.
"The pipeline is financed 30 % by equity and 70 % by financial institutions," he said. "By the end of 2008, we have to have all our homework done to start construction at the beginning of 2009," he added.

Source / Dow Jones & Company
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