Q&A: NABUCCO

Who will pay for the pipeline construction and who will own it?

The estimated cost of the pipeline is 8 billion euros. Thirty percent of this amount will be met by the Nabucco consortium, which is composed of the participant countries’ energy companies, namely Turkey’s BOTAŞ, Bulgaria’s Bulgargaz, Romania’s Transgaz, Hungary’s MOL, Austria’s OMV and Germany’s RWE. The European Investment Bank had pledged to provide 25 percent of the cost and the European Bank of Reconstruction and Development has also promised to contribute to the project, which will be owned by the Nabucco consortium.

What is at stake for the Turkish government and other participating governments?

The Turkish government has sought a “lift-off,” a percentage of the gas in transit. Originally, the government wanted 15 percent of the gas for domestic use or re-export, but has had to withdraw this request. Instead, Turkey will have access to “up to 50 percent of the total gas set aside in a pool,” which can be purchased at a discount. As a transit fee, Turkey will gain around 450 million euros annually. Additionally, as the host of a 2,000-kilometer stretch of the pipeline, more than 10,000 jobs will be created in Turkey.

What is the importance of Nabucco?

Apart from the Baku-Tbilisi-Ceyhan oil pipeline, Nabucco will be only the second project to carry Caspian reserves to Europe from non-Russian territories. This means it will not only reduce the continent’s dependency on Russia, but also that it will, at the same time, tie Turkey closer to the European Union, bringing the country one step nearer to its goal of becoming an energy hub.

How will Nabucco change the global energy game?

Though Azerbaijan appears to be the sole gas supplier to the project at present, in the future it will be open to any third-party bidders. Once the problems over the status of the Caspian are resolved, Turkmenistan may transfer some of its reserves through Nabucco. Iraq has also expressed its intention to take part in the project and Iran may send some of its future gas to Europe if it can normalize its ties with the West. Egypt is also seen as an important future supplier.

Would Nabucco meet European demands?

Nabucco is far from meeting the continent’s growing energy needs on its own. The capacity of the pipeline is 31 billion cubic meters and the EU’s annual gas consumption is predicted to rise to 800 billion cubic meters by 2030. But experts argue that the success of Nabucco would raise the possibility of building Nabucco-2 and even Nabucco-3.

What will happen next?

The signing of the intergovernmental deal will pave the way for the consortium to speed up work on inking the Project Support Agreement. Each participant will sign the accord, which will outline the project’s technical details, a process that will be concluded in six months, according to officials. Then a throughput agreement will have to be concluded to secure the supply and the cost of the gas.