Azernews.Az

One of the hurdles in implementing the ambitious Nabucco pipeline project, which seeks to export Caspian and Central Asian gas to European markets while bypassing Russia, is US policies on the Armenia-Azerbaijan Upper (Nagorno) Garabagh conflict that Baku is discontent with, an influential US analyst says.
In an article published in Eurasia Daily Monitor, Vladimir Socor, a senior scholar at the Jamestown Foundation, explains that political problems have recently added new complications to the Nabucco project. One such problems, clearly recognized by project stakeholders and other European observers, but underestimated in Washington, is "Azerbaijan’s political alienation resulting from recent US policies on the Armenia-Azerbaijan conflict."
"Those policies, in their result if not intent, came close to de-aligning Turkey from Azerbaijan, while strengthening Russia’s and Armenia’s hands in the negotiations on the Garabagh conflict. At perceived risk of isolation, and lacking an outlet to Europe for its growing gas surplus, Azerbaijan is open to Russian and Iranian offers to export its gas in those directions."
The analyst writes that stakeholders and other interested parties in the Nabucco project are expressing concern over the project’s apparent stagnation, and calling for urgent consultations to revitalize the project. Nabucco is simply marking time in the absence of a coordinating mechanism between producer, transit, and consumer countries, and without hands-on leadership from the European Union during the transition from one commission to another in Brussels. The transition and distractions in Washington have also limited the ability of an otherwise supportive United States to help deal with the logjam on Nabucco.
The article says further that Azerbaijani President Ilham Aliyev reminded international media during the Economic Forum in Davos that Gazprom has offered to buy all gas volumes available for export in Azerbaijan ("as much as Azerbaijan can sell") at European-level prices. "If Nabucco continues to be delayed, we will indeed sell more gas to Gazprom," in line with Azerbaijan’s export diversification policy. Meanwhile, the $20 billion investment decision for Phase 2 of Azerbaijan’s Shahdaniz gas field, the source for Nabucco’s first stage, remains on hold, given the persistent uncertainty about the Nabucco pipeline, Aliyev observed, according to Socor. The president also noted "Turkey’s obstruction of pricing and transit agreements for Azerbaijani gas", Socor said.
The article notes that Baku remains willing and indeed eager to see the Nabucco project move forward and looks to the EU for leadership in that regard.
The story said the EU has signed a memorandum of understanding on energy partnership with the central
government of Iraq. However, difficult pre-conditions need to be fulfilled before the gas can flow from northern Iraq (presuming a satisfactory security situation). As listed by the government in Baghdad, the pre-conditions include meeting local demand for gas and contributing to Iraq’s overall gas supply. Meeting the challenges involves political complexities and time-consuming negotiations, the analyst notes.
"Thus, Azerbaijani gas remains the existential issue for Nabucco at least in the first stage; and Turkmen gas via Azerbaijan, just as vital for Nabucco’s second stage and the overall Southern Corridor."
The 3,300-kilometer Nabucco pipeline, which is to pump gas via Azerbaijan, Turkey, Georgia, Bulgaria, Hungary, Romania and Austria, is due to be commissioned in 2014. The 7.9 billion-euro project is headed by Austria’s OMV AG with shareholders RWE AG of Germany, Hungary’s Mol Nyrt., Romania’s Transgaz SA, Bulgaria’s Bulgargaz AD and Turkey’s Botas.*