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Will Nabucco pipeline deal free Europe from Russian gas?

The EU and Turkey signed a $11 billion gas pipeline deal that should give Europe more supply options.

By Staff writer of The Christian Science Monitor / July 13, 2009

From left, European Commission President Jose Manuel Barroso, prime ministers Gordon Bajnai of Hungary, Werner Faymann of Austria, Recep Tayyip Erdogan of Turkey, Sergei Stanishev of Bulgaria, and Emil Boc of Romania are seen during the Nabucco Gas Pipeline signing ceremony in Ankara, Turkey, on Monday.

Burhan Ozbilici/AP

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It's being called a milestone for energy-hungry Europe.

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Today's European Union-Turkey deal to begin building the 2,000-mile Nabucco gas pipeline from the Caspian Sea to Austria – reducing Europe's dependency on Russia – means investors can legally move on a project that has been much more talked about than acted on since 2002.

But many milestones remain in the great geopolitical game over energy from the Caucasus and Central Asia – many involving the Russian bear.

"We are determined to make the Nabucco pipeline a reality as quickly as possible," said José Manuel Barroso, head of the European Commission, staking out a tough position. Last week, Russian national energy security fund chief Konstantin Simonov pooh-poohed the deal, calling it "only a piece of paper."

After a brutally cold winter in which much of the Balkans and southern Europe faced freezing cities and homes due to a Russia-Ukraine gas and politics dispute, the EU has been under pressure to act on its members' behalf.

The pipeline is named after a Verdi opera whose subject is liberation from bondage.

Along with EU representatives, officials from Bulgaria, Romania, Hungary, and Austria – all states the pipeline will transit – were in Ankara for Monday's signing.

The €8 billion ($11 billion) project will now compete with a €10 billion ($13.9 billion) Russian South Stream project, which will also be laid under the Caspian, bypassing Ukraine, and that may come on line in 2015, the same year Nabucco proposes to.

"Barroso wants to show to European countries that he is very active in this project of so-called energy security of Europe," Mr. Simonov told New Europe magazine last week. "Barroso only wants to show to [Russian Prime Minister Vladimir] Putin that 'You see now we have this project.' And Europe is involving Russia in this dangerous game."

Yet energy experts say a competitive pipeline may be as much a useful strategic political tool as an energy source – in dealing with Moscow, and in forcing Ukraine and Russia to settle disputes.

If they build it, will gas come?

Nabucco's commercial success is considered a frail reed, and it may be reliant on EU and US government backing. The EU has already designated €200 million ($278 million) in start-up funding, with more to come as part of a stimulus package distributed in 2009 and 2010.