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.
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"Nabucco is turning pipeline economics on its head," says Paul Stevens, senior research fellow on energy at Chatham House in London. "Normally you find gas and build a pipeline. Nabucco is building a pipeline, and then looking for gas."Skip to next paragraph
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A main unanswered question is whether governments and energy fields in the supply states of Azerbaijan, Turkmenistan, Kazakhstan, and Uzbekistan – can or will reliably divvy up and deliver gas over time. There's an expected intense bidding war, in some cases over gas fields whose yields are not yet concretely confirmed.
In recent weeks, Azerbaijian signed a deal with Russia, but also says it will sell to Nabucco. Turkmenistan had said it would not sell gas for the Nabucco pipeline in a meeting in Prague, Czech Republic, in May, but last week said it would.
US says 'no' to Iran gas
Reuters reported that US special energy envoy Richard Morningstar said Sunday that Russia is free to supply gas to the Nabucco pipeline, if countries participating in the project accept it as a partner. But he reiterated Washington's opposition to the use of Iranian gas.
He says that this looked viable prior to the Iranian elections, with President Obama looking to open relations with Iran. But the "de facto coup in Iran makes the immediate commercial goals dimmer for Nabucco."
Today's signing was made possible by an agreement from Turkey to back off a whopping bid to take 15 percent of the pipeline's flow, for use as it wishes. However, Ankara agreed to a substantial cash transit fee instead.
Giles Merritt, director of the Security & Defence Agenda, a think tank in Brussels, warns that this deal is "triumphalism" designed to "cock a snoot" at Moscow. He says that all parties in the discussion, starting with Turkey, will be extremely difficult to deal with every step of the way.
But he says that the EU may be moving ahead with the pipeline deal as a way to force "a catalyst for Europe's energy security strategy." This deal forces a change in EU politics. "We've had uplifting rhetoric [on a common energy strategy], but now we will need to define the details.... The solidarity of EU nations will now be tested."