NABUCCO AGREEMENT MAY PROVIDE ENTRY POINT FOR IRAN

Asbarez
Jul 21st, 2009

ANKARA (Today’s Zaman)-A long anticipated agreement on the Nabucco gas
pipeline project signed last week by the prime ministers of Turkey,
Austria, Bulgaria, Hungary and Romania includes provisions that
may open the way for Iranian involvement in the project, despite
US disapproval.

Ankara welcomed regional and international supporters on July 13 to
the signing of an intergovernmental agreement on the $10.3 billion
Nabucco gas pipeline, which seeks to free Europe of its heavy reliance
on Russia.

Although initially deemed an integral part of the Nabucco pipeline
project that aims to transport Caspian and Middle Eastern natural gas
to European markets through Turkey, Iran was left out of the signing
ceremony in Ankara.

Energy pundits say that Iran was advertently kept off the list of
the invited nations due to its deep clashes and adversity with the
US, especially over its uranium enrichment program, and having US
support for the project was vital to make it an effective alternative
to Russia’s pipelines.

However, some Nabucco officials claim that the agreement signed by
the prime ministers of Turkey, Austria, Bulgaria, Hungary and Romania
last week in a glamorous ceremony still included Iran, hidden in some
articles. Iran’s exclusion had caught international energy market
analysts by surprise since without the vast resources of Iran,
Nabucco’s target quantities would be extremely difficult to achieve.

Speaking to Today’s Zaman on the condition of anonymity, Nabucco
officials said the final decision on Iran will be shaped by
international developments.

Section Eight of Article 2 of the agreement defines the Initial Entry
Points as "the starting points of the Nabucco Project at any three
points on the eastern or southern land borders of the Republic of
Turkey as selected by Nabucco International Company, and, subject
to agreement by the Nabucco Committee in consultation with Nabucco
International Company, any other point at the eastern or southern
Turkish border. The exact location of the Initial Entry Points at the
respective borders is subject to the standard permitting and related
authorization procedures."

This article, officials say, points to Iran in its mention of three,
plus one optional, entry points but avoids naming them. A Nabucco
official said this sentence was intentionally devised to allow Iran
to enter the project later on, but it used the expression of "entry
point" instead of "supplier country" to dodge alluding to Iran’s
potential inclusion.

The 3,300-kilometer gas pipeline project will have a potential capacity
of 31 billion cubic meters of gas annually starting from 2015 and is
expected to cost $11 billion.

Although it has been officially invited to20be a supplier for the
pipeline several times, Russia has clearly rejected joining the project
and instead has accelerated the construction of a new alternative route
to transport its resources to Europe. Russia has also explored striking
gas purchase deals with several potential Nabucco suppliers around the
Caspian Sea. Iraq, Azerbaijan, Turkmenistan, Egypt and Syria are so far
the only countries that have pledged to pump gas to Europe via Nabucco.

The state-owned Turkish Pipeline Corporation (BOTAS) currently has
pipelines for gas from Iran and Azerbaijan but must construct new
pipelines to access the resources of Iraq and Egypt.

Russia has the world’s largest natural gas reserves, with 47.65
trillion cubic meters of proven reserves. Iran comes second with 28.13
trillion cubic meters of gas beneath its soil, and then come Qatar
and Saudi Arabia, with 25.36 trillion cubic meters and 7.7 trillion
cubic meters of reserves, respectively.

The idea that Nabucco is destined to arrive stillborn without the
inclusion of major gas providers like Iran has been backed by the
statements of Nabucco officials and of partner countries. None of them
have publicly ruled out Iran as a gas supplier to the pipeline so far;
in fact, there have been numerous remarks claiming the contrary.

In an interview with Today’s Zaman last week, after the agreement
was signed, Reinhard Mitschek, the managing director of Nabucco
Gas Pipeline20International, said that Nabucco would not exclude
any potential source and will be open for the transportation of any
gas meeting quality requirements from every potential gas supplier,
including Iran and Russia.

"Nabucco has never, ever excluded any source. Bottom line, we have to
buy the gas. The national gas companies will evaluate the political
aspect, the commercial aspect, the technical aspect and then they
will decide to buy gas from Azerbaijan, Turkmenistan, Iraq, Iran and
Russia," said Mitschek.