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Nabucco delayed by 'politics,' RWE says

disclaimer: image is for illustration purposes only
by Staff Writers
Brussels (UPI) Nov 5, 2010
The battle of the pipelines is in full swing as an official of a German utility involved in the Nabucco pipeline project said only political maneuvering has delayed the construction of the EU-backed pipeline.

"Without politics, Nabucco would have been built many years ago," Jeremy Ellis, head of business development at RWE Trading, one of Europe's largest energy trading firms, told the European Energy Review, an online energy magazine.

"Technically, strategically, commercially, it is the right thing to do and it could have been realized significantly earlier. The dynamics of the process are closely tied up with the politics -- with the various interests of the countries involved."

Launched to make Europe less dependent on Russian energy imports, Nabucco is designed to transport 1.1 trillion cubic feet of natural gas per year from Caspian and Middle Eastern sources to Europe.

However, Russia has since launched a competitor project, South Stream. Intended to move 2.2 trillion cubic feet of gas per year from Russia under the Black Sea to Bulgaria and then on to Western Europe, South Stream has already secured Central Asian gas and could be supplied with Russian sources as well.

Observers have warned there is demand and supply for only one of the two pipelines -- so fierce political wrangling has delayed both pipelines.

Nabucco's main problem is that it hasn't secured any gas supplies. Deals with Turkmenistan, Azerbaijan and Iraq have been delayed by Russia's eagerness to keep its influence over Central Asia and the difficult domestic situation in Iraq, where security issues and conflicts between the national government and the Kurdish authority in the north prevent gas from being exported.

Ellis said he was optimistic that Central Asian and Middle Eastern countries would want to diversify their export sources.

"We are progressing on Azerbaijan, we are progressing on Northern Iraq and we are trying to progress on Turkmenistan," he said in an interview with the EER.

Ellis also claims that Nabucco is the more cost-effective option.

He told the magazine that the Russian pipeline is "three or four times as expensive as Nabucco, based on figures in the public domain.

"It's completely clear that Nabucco is the most economic way and from a technical point of view the most secure transit route to get these gas supplies to the European market," Ellis said, adding that it was "now or never" for the completion of the pipeline.

Russian officials, however, say the same thing of Nabucco, claiming South Stream would be cheaper than Nabucco.

Intended to be completed in 2015, Nabucco is backed by Germany's RWE, OMV from Austria, Hungary's MOL as well as firms from Turkey, Bulgaria and Romania.

Russian state-controlled energy giant Gazprom, Italy's Eni and possibly Electricite de France are behind South Stream, which was launched in 2007.

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