Germany’s RWE to give up Nabucco project

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Published time: December 03, 2012 10:44
Edited time: December 04, 2012 15:22

German second largest energy company RWE is going to leave the Nabucco gas pipeline project and is reportedly discussing the sale of its 16.1% stake to Austria’s OMV.

­OMV, the Austrian oil and gas company which owns another 16% in the Nabucco project, could conclude the purchase from RWE as early as this week, Focus magazine reported citing people familiar with the project.

The other shareholders of Nabucco are Hungary's MOL, Turkey's Botas, Bulgaria's BEH and Romania's Transgazm, each holding about 16% of shares, with RWE's stake the largest.

In May RWE said it was reviewing strategic requirements regarding its participation in Nabucco, sparkling rumors it would leave the project.

The Nabucco pipeline project is aimed at delivering Caspian gas to the European Union to rival Russia’s South Stream. According to the original plan, the 3,900 km pipeline was to cross Azerbaijan, Georgia, Turkey, Bulgaria, Hungary and Romania to end in Austria and was designed to supply up to 31bn cubic metres per year. The start of construction was scheduled for 2013. 

“RWE is one of the biggest gas consumers in Europe. If it decides to leave the project it would definitely put it at risk. It can be delayed for few more years. But the more they delay, the less gas Europe needs. By the time they decide to do something the South stream may well be at their boarder. Europe just don’t need that much gas”, Ildar Davletshin, Oil and gas analyst from Renaissance capital.

But several months ago the project was put in doubt as it became clear there were no guarantees there would be enough gas. Hungary's Prime Minister Viktor Orban said the country's utility MOL was leaving Nabucco due to the financial constraints of the project.

Recently the Nabucco consortium submitted plans for a smaller Nabucco West pipeline which would deliver gas from Azerbaijan’s Shah Deniz 2 field.

Meanwhile Russian major gas producer Gazprom and its partners in the South Stream gas pipeline, including Eni, EdF and BASF have signed off on the final investment to begin the 16 billion euro project. The construction is due to start on December 7.