NABUCCO PROJECT STAKEHOLDERS LOOK FORWARD TO LEADERSHIP IN BRUSSELS
By Vladimir Socor

Asbarez
Feb 3rd, 2010

Stakeholders and other interested parties in the Nabucco project
are expressing concern over the project’s apparent stagnation, and
calling for urgent consultations to revitalize the project.

Nabucco is simply marking time in the absence of a coordinating
mechanism between producer, transit, and consumer countries,
and without hands-on leadership from the European Union during the
transition from one commission to another in Brussels. The transition
and distractions in Washington have also limited the ability of
an otherwise supportive United States to help deal with the logjam
on Nabucco.

Political problems have recently added new complications to the Nabucco
project. One such problem, clearly recognized by project stakeholders
and other European observers, but underestimated in Washington, is
Azerbaijan’s political alienation resulting from recent US policies
on the Armenia-Azerbaijan conflict. Those policies, in their result
if not intent, came close to de-aligning Turkey from Azerbaijan,
while strengthening Russia’s and Armenia’s hands in the negotiations
on the Karabakh conflict. At perceived risk of isolation, and lacking
an outlet to Europe for its growing gas surplus, Azerbaijan is open
to Russian and Iranian offers to export its gas in those directions.

Azerbaijani President Ilham Aliyev reminded international media during
the Economic Forum in Davos that Gazprom has offered to buy all gas
volumes available for export in Azerbaijan ("as much as Azerbaijan can
sell") at European-level prices. "If Nabucco continues to be delayed,
we will indeed sell more gas to Gazprom," in line with Azerbaijan’s
export diversification policy. Meanwhile, the $20 billion investment
decision for Phase Two of Azerbaijan’s Shah Deniz gas field (the
source for Nabucco’s first stage) remains on hold, given the persistent
uncertainty about the Nabucco pipeline, Aliyev observed.

"So far we do not know which leader would move the process forward.

Who will engage in negotiations with gas producers and transit
countries? Who will do the marketing for this gas? What will be the
pricing? These are a lot of questions that remain unanswered for quite
a long time," he asserted. Aliyev also noted Turkey’s obstruction of
pricing and transit agreements for Azerbaijani gas: "how can we move
ahead [with Nabucco] in such circumstances?" (ANS, Bloomberg, January
27; , Wall Street Journal, January 28; Hurriyet, January 29).

Baku remains willing and indeed eager to see the Nabucco project move
forward and looks to the EU for leadership in that regard. Aliyev made
this clear to executives of the German RWE Company (a stakeholder in
the Nabucco project) in elaborating on his remarks in Davos (Bloomberg,
January 29).

The Turkish Prime Minister Recep Tayyip Erdogan and his Bulgarian
counterpart Boiko Borissov are also urging the EU to play a more active
role in advancing the Nabucco project. Borissov has most recently
expressed concern over the slow pace of Nabucco’s development and
pledged Bulgarian support to advance the project. At their joint news
conference, Erdogan asked Borissov to ensure that EU member Bulgaria
advocates the Nabucco project with the European Commission in Brussels
(BTA, January 29; Hurriyet, January 30). Erdogan’s remarks implicitly
offer Brussels an opportunity to facilitate the negotiations between
Ankara and Baku.

On January 18, the Romanian President Traian Basescu urged more active
EU support for Nabucco when meeting with the European Council’s new
President, Herman van Rompuy, in Brussels (Agerpres, January 18). The
Hungarian government and the private MOL Company (a privately-owned
stakeholder in the Nabucco consortium) also look forward to a proactive
role by the European Commissioner.

The EU’s outgoing Energy Commissioner, the Latvian Andris Piebalgs,
a committed supporter of Nabucco and the Southern Corridor,
had little support from Western Europe’s large and influential
countries. In one of his last acts in that post on January 18,
Piebalgs signed a memorandum of understanding on energy partnership
between the EU and the central government of Iraq. Piebalgs termed
Iraq an important element in the EU’s energy supply diversification
strategy. The EU Commission is mainly interested in Iraqi gas from
the Kurdish-administered area for the Nabucco and Southern Corridor
projects. Nabucco stakeholders expect ultimately 5 to 10 billion cubic
meters (bcm) of gas per year from northern Iraq via Turkey to Europe.

Some in the energy business have tended to imply that gas from Iraq
could somehow reduce the vital importance of Azerbaijani gas for
Nabucco. This view may reflect frustration with the Ankara-Baku impasse
and some indifference about who is responsible. However, difficult
pre-conditions need to be fulfilled before the gas can flow from
northern Iraq (presuming a satisfactory security situation). As listed
by the Kurdish administration and the central government in Baghdad,
the pre-conditions include meeting local demand for gas, contributing
to Iraq’s overall gas supply, and negotiating revenue-sharing between
Kurdish and Baghdad central authorities under a new oil and gas law
for Iraq. All this involves political complexities and time-consuming
negotiations. Thus, Azerbaijani gas remains the existential issue for
Nabucco at least in the first stage; and Turkmen gas via Azerbaijan,
just as vital for Nabucco’s second stage and the overall Southern
Corridor.

From: Emil Lazarian | Ararat NewsPress