EU nations, Turkey sign major pipeline deal

By Hande Culpan
Agence France-Presse

ANKARA (AFP) — Four EU countries and Turkey signed an accord Monday on building a major US-backed gas pipeline to reduce European reliance on Russia amid lingering uncertainty on who will supply the gas.

The prime ministers of Austria, Bulgaria, Hungary, Romania and Turkey, inked the intergovernmental accord, hailing it as a milestone in the Nabucco pipeline project, long delayed by lack of commitment from gas-exporting nations.

The 3,300-kilometre (2,000-mile) conduit is planned to become operational in 2014 at an estimated cost of 7.9 billion euros (10.9 billion dollars), with a capacity to pump 31 billion cubic metres of gas from the Caspian Sea to Austria via Turkey and the Balkans, bypassing Russia.

The project "is of crucial importance for EU's and Turkey's energy security," European Commission chief Jose Manuel Barroso said at the ceremony.

"Sometime ago people said the project would not go ahead. I believe this pipeline is now inevitable rather than just probable," he said.

Turkish Prime Minister Recep Tayyip Erdogan voiced confidence that "the more steps we take (on realising the project), the more the interest of supplier countries will grow."

His Hungarian counterpart Gordon Bajnai warned of "extremely difficult moments in the coming years that will require the highest level of commitment."

Azerbaijan is seen as the primary potential provider of gas for the conduit, with Turkmenistan, Iraq and Egypt also mentioned for the long term.

Azerbaijan insists it has enough reserves for the conduit. But last month it raised concerns among Nabucco proponents, signing a deal to export gas to Russia starting in 2010.

The Nabucco project aims to avoid a repetition of cut-offs that have disrupted Russian supplies to Europe during the winter, with Moscow accused of using the gas as a political weapon.

A quarter of all gas used in Europe comes from Russia, with several southern European countries depending almost exclusively on Russian supplies.

"Russia is expected not to hinder directly or indirectly the Nabucco project," said Bulgarian premier Sergey Stanishev, whose country was among the hardest hit by the cut-offs.

Nabucco is in direct competition with Russia's South Stream project, which will carry Russian gas through Bulgaria to Western Europe under the Black Sea.

The project appeared to get a boost Friday when Turkmenistan said it was prepared to supply Nabucco with gas, despite its earlier reluctance.

And Iraqi Prime Minister Nuri al-Maliki, who attended Monday's gathering here, said his country might contribute 15 billion cubic meters of gas.

But a US official cast doubt on the proposal, pointing at lingering disputes over natural resources between Baghdad and the Iraqi Kurds, who control oil- and gas-rich northern Iraq.

Iraq "needs some time to figure out how it is going to develop its natural resources and where it will sell that gas," Matthew Bryza, US deputy assistant secretary of state for European and Eurasian affairs, told reporters.

Iran is another possible supplier, but both the United States and the EU are opposed to its participation.

Still, Erdogan insisted Monday that Iran and even Russia might join the project "when conditions allow" in the long term.

Two European banks have expressed readiness to finance the project, but analysts say securing the cost could be difficult in the global economic slowdown and uncertainty over suppliers.

The project has been delayed also by Turkish demands to use 15 percent of Nabucco's gas for domestic use or even for re-export.

EU officials said Ankara's concerns were to be addressed by an arrangement under which the pipeline would operate both ways, giving Turkey access to European stockpiles in times of need.

Erdogan said the pipeline "will elevate Turkey to a significant position" for European energy security and help boost its struggling EU membership bid.

Barroso praised Turkey's role, saying the project "could open the door to a new era in relations between Turkey and the EU, and beyond."

The pipeline's shareholders are Austria's OMV, Turkey's Botas, Bulgaria's Bulgargaz, Hungary's MOL, Romania's Transgaz and Germany's RWE.