Nabucco Official Says EU 'Very Supportive' Of Pipeline Project

The ongoing dispute between Russia and Ukraine over natural-gas shipments to Europe has left the European Union cold -- and eager to re-examine its options for fuel supplies. One alternative is the Nabucco pipeline, which would ship Central Asian gas directly to Europe and circumvent Russia and other troublesome countries altogether. But the EU has yet to put its weight fully behind the Nabucco project, which is still years away from completion.

Reinhard Mitschek is an official with Austria's OMV oil and gas group, and the managing director of the Nabucco pipeline. He spoke about the future of Nabucco with Taher Shirmohammadi, a correspondent with RFE/RL's Turkmen Service.

RFE/RL: What are the current prospects for the Nabucco pipeline?

Reinhard Mitschek: The prospects for the Nabucco gas pipeline are excellent. Gas consumption in Europe will increase in the coming years and decades. At present, there are three main sources of gas for Europe -- one is Russia, the second is the North Sea, and the third is North Africa. As I already said, gas consumption in Europe is set to increase, there are vast reserves of gas in Central Asia and the Middle East, and we want to implement the Nabucco project in order to link those reserves with consumers.

RFE/RL: Nabucco has been under discussion for a long time, but now it is at the focus of attention. Could Nabucco, in your opinion, lessen Europe's dependency on Gazprom?

Mitschek: Nabucco will contribute substantially to increasing the choice of options and to diversifying the routes for transporting gas to Europe. We are planning a technical capacity of 31 billion cubic meters of gas.

RFE/RL: You mentioned Central Asia. There have been media reports that Turkmenistan has agreed to participate in the Nabucco project, but the Turkmen government has not yet made any clear statement to this effect. What do you have to say on this?

Mitschek: The Nabucco pipeline begins at the eastern border of Turkey and will transport gas via Turkey, Bulgaria, Romania, and Hungary to Austria and from there onwards to other European countries. We will also build facilities along that route to supply gas to neighboring southeast European countries.

We are proceeding on the assumption that this route to Europe is of interest not only to Azerbaijan but also to Turkmenistan, because just as purchasers of gas seek to diversify supplies, so producers in Azerbaijan, Turkmenistan, and other countries that produce and export gas are seeking to diversify export routes. This raises the value of their reserves and serves to develop the economy of the countries in question.

For that reason, I work on the assumption that Turkmenistan too will seek and find a market in Europe for its gas.

RFE/RL: Turkmenistan has gas reserves but only limited ability to extract that gas. Does that not increase the risk for Nabucco?

Mitschek: We have to look at the time frame. When we talk about Nabucco, that means that we begin construction next year, in 2010, the first gas will be transported in 2013. We will transport between 8-10 billion cubic meters of gas in 2013-2014 and then increase the quantity step by step to 31 billion cubic meters. That means that we do not expect to acquire any gas from Turkmenistan in the short- to medium-term, but that in the medium- to long-term Turkmenistan will invest in production, infrastructure, and in feeder pipelines to Nabucco.

Energy sector projects are long-term not short term, so we have good reason to believe that [eventually] gas from Turkmenistan will be exported to Europe via Nabucco.

RFE/RL: What are the main obstacles to Nabucco at present? There have been reports that Turkey as the main transit country is demanding 15 percent of the volume in transit fees.

Mitschek: Nabucco is an extremely complex project. We are undertaking a completely new export route. We want to tap into new sources of gas for Europe, and doing this necessitates extensive and complex negotiations, on the one hand at the level of the companies involved and on the other at the level of the governments of the countries participating. Talks are under way between Turkey, Bulgaria, Romania, Hungary, and Austria on an intergovernmental agreement, and I am confident that this agreement will be signed relatively soon. This will be a good foundation upon which to proceed with technical issues and the actual construction.

RFE/RL: What is Russia's attitude to Nabucco? Russian media report that there is not enough gas in Central Asia to make Nabucco economically viable.

Mitschek: If we compare different regions bordering on Europe, there are studies proving that Central Asia and the Middle East is the richest region in the world in terms of gas reserves, and so I have no worries about securing the required 31 billion cubic meters for Nabucco. Recent estimates of Turkmenistan's gas reserves by independent foreign companies have established that those reserves are far higher than initially supposed. The study of the Yolatan field has established that its reserves are very high and very promising, and so we anticipate additional supplies of gas from Turkmenistan for Europe, as well as from other countries.

RFE/RL: How about financing? Have you approached the EU with a request, and will the EU support the project financially?

Mitschek: The EU is very supportive of the project. We have received financing for the feasibility study and we are in close contact with the European Investment Bank, the EBRD, the World Bank, and with banks that promote exports, and so the funding for the project is secured.

RFE/RL: There will be a summit on January 26-27 of the participating countries in Budapest. What do you expect from that summit?

Mitschek: Firstly, this summit is a unique opportunity to bring together around one table leaders from the participating Nabucco countries, the European Commission, and the countries of Central Asia, including Turkmenistan and Azerbaijan, in order to exchange ideas and support. The banks I mentioned -- the European Investment Bank and the EBRD -- will also participate, and I expect the conference to yield substantive support for the project and a good possibility to develop it further.

RFE/RL: Will Iran participate in that conference?

Mitschek: The conference is being organized not by the Nabucco consortium, but by the Hungarian government, and so I do not have precise information about the complete list of participants.

RFE/RL: You mentioned that construction will begin in 2010, but there is already a huge crisis in Europe with gas supplies, especially in Eastern Europe. Is there not a need to start implementing the project straight away?

Mitschek: This crisis has shown that the gas consumption in Europe is very high, and that diversification of supplies and transport routes is very important in order to ensure and improve stable consumption and a stable supply of gas. The Nabucco project will raise the market liquidity and increase the competitiveness of the energy market in Europe.

RFE/RL: What about the leaders of the countries that border on the Caspian Sea? Until now, the only country they could sell their gas to was Russia. They could only dream of European markets.

Mitschek: Over the past 18 months I have accompanied several delegations to Azerbaijan and Turkmenistan, I have attended several conferences and also had the opportunity to meet with several political representatives and energy ministers. The governments of these countries are implementing a prudent energy policy that envisages export diversification, and for that reason they very much want an outlet to Europe. And this is an approach which benefits Nabucco.