Azernews.Az

Azerbaijan's gas will be transported to energy-hungry European markets through the NABUCCO pipeline, a senior energy executive's recent talks in Baku suggest, but the details of the deal are not disclosed for the time being.
The managing director of NABUCCO Gas Pipeline International Reinhard Mitschek told local media after successful talks in the Azerbaijani capital that a number of agreements had been signed during his meetings. He said the gist of the contracts would be divulged later to keep the commercial secret of the deals.
"The public will be informed after the interested parties work out all the details. This is a practice widely used around the world with regard to such agreements," Mitschek said.
The West-backed pipeline by-passing Russia is to pump gas from the resource-rich Middle East and Caspian regions to Europe. 2,000 km of the pipeline will go through Turkey, while 400 km through Bulgaria, 460 km via Romania, 390 km Hungary and 46 km Austria. The pipe's annual throughput capacity is estimated at 31 billion cubic meters. Building the 3,300-km trans-Caspian conduit could take until 2012, while transportation of first gas via the pipe is expected in 2013.
Mitschek said the NABUCCO pipeline was currently valued at 5 billion euros. He said the key objective at this point was to synchronize production and transportation of natural gas.
The energy executive made it clear during the meetings that his company was not a buyer of gas and that the issue was in the competence of importing countries and the states possessing hydrocarbon fields. However, NABUCCO Gas Pipeline International is in talks with a host of gas-rich countries around the globe - from Caspian littoral states to Northern African nations - to determine the potential of supplying gas for the pipeline.
The timeframe of construction and commissioning of the NABUCCO conduit indicate that this route will be used to supply Azerbaijani gas to Europe. The pipe will become operational at about the same time work is completed on Phase 2 of developing the country's biggest offshore field Shahdaniz.
The Shahdaniz field launched production in 2006. The field holds estimated reserves of 1.2 trillion cubic meters of gas. The resources are used both to meet domestic demand and for exports to European markets through the Baku-Tbilisi-Erzurum (BTE) pipeline.
One of the vital pipelines to deliver Azerbaijani gas for pumping via NABUCCO is the 690 km South Caucasus Pipeline (SCP), the Azerbaijan-Georgia section of the BTE pipe. According to Mitschek, SCP's capacity could be doubled to 25-30bn cu. m. in the future by building additional compressor stations.
Mitschek also indicated that the European Union was keen on gas supplies from Central Asia, and Turkmenistan in particular. He emphasized that according to the latest estimates, the country is producing 70-75 billion cubic meters of gas a year, with the figure expected to potentially reach 200 billion cubic meters.
It is evident that considering NABUCCO's considerable throughput capacity, it will transport gas from regions other than Azerbaijan as well. However, securing supplies from at least one source raises confidence amongst European energy executives.
Hungary has recently become a third state - after Bulgaria and Serbia - to join Russia's rival South Stream project that will export Central Asian and Russian gas, bolstering Russia's bid to keep the clout over European gas supplies. Russian President Vladimir Putin called South Stream a much more efficient route than NABUCCO, but analysts have cited a number of roadblocks in the way of the project.
European countries are upbeat on diversifying supplies of energy and see NABUCCO as a key route. Mitschek's report posted on the website of NABUCCO Gas Pipeline International says Europe's dependence on gas imports will increase to 48% by 2010 from 41% in 2005. The figure will climb steadily in the ensuing years to hit 74% by 2030.
By 2010, the 27 EU member states will be importing 260 million tons of the oil equivalent annually compared to 187 million tons in 2005. By 2030, the EU will be importing 226m tons, and an additional 241m tons will be required, with suppliers of the fuel yet to be determined. By that time, the industrial sector of the union's member states will be consuming 156m tons a year, while the electric power sector - 239m tons.
Mitschek said talks on concluding first inter-governmental agreements on gas supplies for the NABUCCO pipeline are to be completed in 2008. Half of the conduit's throughout capacity - or about 15bn cu. m. - will be split among partners of NABUCCO Gas Pipeline International, while the other half - among third states.
The consortium is expected to start negotiations with international financial institutions this year on obtaining funding for the pipeline construction.
Work will also be tackled to draw up an assessment on the environmental impact of construction operations.
US engineering and construction firm KBR Inc has won a tender of the Azerbaijani state oil company SOCAR to develop a feasibility study of the trans-Caspian gas pipeline, which is a key part of the NABUCCO project. The company will carry out the work on account of the $1.7 million grant allocated by the State Department.
The project has six shareholders holding equal shares - German RWE, Turkish BOTAS, Romanian Transgas, Bulgarian Bulgargas, Austrian OMV, and Hungarian MOL.