The ambitious Nabucco pipeline project intended to pump Central Asian natural gas to Europe bypassing Russia has been excluded from EU’s priority projects, a source in the EU’s Council of Ministers said on Tuesday.
The Nabucco gas pipeline is to be laid through the territories of Azerbaijan, Georgia, Turkey, Bulgaria, Romania, Hungary and Austria to connect Europe with Central Asia, which is rich in hydrocarbons, bypassing Russia.
The project is supported by 27 EU members, all the transit countries, and the US.
The estimated cost of Nabucco pipeline, construction planned to start in 2010, is $10 billion.
The previously announced €250 million (approximately $323 million) allocated to start the project were recently cut to just €50 million ($64.5 million) due to the economic crisis.
From the very beginning the project was considered as a rival to Russia’s South Stream gas pipeline designed to annually pump 31 billion cubic meters of natural gas from Russia and Central Asia via the Balkans to Europe. Bulgaria, Serbia, Hungary, Italy and Greece have already agreed to participate in the project.
Russia-Ukraine gas conflicts raised concerns over the energy dependency of Europe once Russia completely cut off gas supplies to Ukraine at the beginning of January 2009 after failing to reach agreement over annual gas prices payment of a Ukrainian gas debt. Later on Russia stopped gas deliveries to Europe via Ukraine, stating that the latter was stealing transit gas. Kiev denied the accusation.
“The Ukraine gas dispute has created a tremendous interest in building alternative pipelines, but at the same time they are expensive and Europe doesn’t have enough money,” says professor Alan Riley from the Centre for European Policy Studies.
At the same time Russia’s gas monopoly Gazprom is sure of the South Stream project's future.
“Unlike Nabucco, we have everything we need to make this project a success. We have gas, we have the market, we have expertise and technical capabilities for implementing such complex projects, and, most importantly, we have corporate governance,” Gazprom Deputy CEO Aleksandr Medvedev said.
Commenting on Russia's gas monopoly refusal to participate in the Nabucco project, Gazprom's CEO said that “We do not wish this project ill. May God help implement it. We have been invited to join in, but we will implement our own project.”