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Nabucco venture sees Iraq as top supplier

BUCHAREST – Bloomberg | 9/30/2010 12:00:00 AM |

The Nabucco natural-gas pipeline venture sees Iraq as the “most real” supplier for the pipeline, which will ship fuel from the Caspian Sea to Europe.

The Nabucco natural-gas pipeline venture sees Iraq as the “most real” supplier for the pipeline, which will ship fuel from the Caspian Sea to Europe.

Iraq is bigger and less dependent on Russia than Turkmenistan or Azerbaijan, Head of Corporate Affairs Dimitar Abadjiev told reporters in Bucharest Thursday. “That’s why I expect to have the first gas from Iraq,” he said.

The 7.9 billion-euro ($10.8 billion) pipeline is designed to carry gas more than 3,300 kilometers (2,050 miles) from Turkey to Austria to reduce Europe’s dependence on Russia. The venture on Sept. 6 said it may get as much as 4 billion euros in loans from the World Bank, the European Bank for Reconstruction and Development and the European Investment Bank.

The World Bank, European Bank for Reconstruction and Development, or EBRD, and European Investment Bank, or EIB, are scheduled to make an announcement on financing in the second half of 2011, Abadjiev said. Construction will start immediately after, he said.

The venture is in preliminary talks with Iraqi authorities via RWE AG, which is among Nabucco’s shareholders, Abadjiev said. It also is in talks with Egypt, he said.

RWE, Germany’s second-largest utility, in August signed a cooperation agreement with the regional Kurdish administration in northern Iraq to help develop the Iraqi region’s gas distribution network.

[HH] Domestic Needs

“Before any export, our gas will be used to meet the needs of the people of the Kurdistan region and neighboring areas,” KRG Prime Minister Barham Salih said in an Aug. 26 statement posted on the regional government’s website. “These resources are being developed for the people of Iraq in accordance with the constitution. Gas not needed at home will be available for export.”

The Iraqi oil ministry responded by publishing a statement on its website “stressing that Iraq is exporting crude oil and gas through the Iraqi oil marketing company exclusively and there is not any other party authorized to sign contracts with international companies.”

Nabucco shareholders Hungary’s Mol Nyrt and Austria’s OMV AG each bought a 10 percent stake in Dana Gas PJSC’s Iraqi unit Pearl Petroleum in May 2009 as part of a plan to supply the pipeline.

Nabucco expects to get 10 billion cubic meters from Iraq and 8 billion cubic meters from Azerbaijan’s Shah Deniz field, Abadjiev said.

He is “optimistic” that negotiations with Shah Deniz will be fruitful, as it has an interest in diversification and in having access to European markets, Abadjiev said.

“This isn’t only a question of price,” he said, adding that Russia was betting on price in regard to Shah Deniz.

Negotiations with Shah Deniz will start in November, at the same time as the venture commences the so-called “open season,” which the project’s planners will use to gauge interest in gas supplies from potential customers.

Nabucco partners, which also include Bulgargaz, Romania’s Transgaz and Ankara-based Botaş, will decide on the investment next year.

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