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Many western experts have questioned the Nabucco pipelines ability to secure sufficient upstream gas supplies without Iran.
Uncertain supplies from Central Asia and Iraq have led a European Union-backed pipeline consortium to look to Iran as a source of natural gas to reduce Europe's dependence on Russian energy.
The proposed $11.1-billion Nabucco pipeline, which would run from Central Europe through the Balkans and Turkey, would bring natural gas to Europe from Caspian Sea nations if it goes on stream in 2014.
Austria, Bulgaria, Hungary, Romania and Turkey--the countries through which the pipeline would pass--will sign an agreement in Ankara, the Turkish capital, next week to provide a legal framework for allocating gas to each country, AFP reported.
However, such a signing has already been delayed several times.
Diversification
Reinhard Mitschek, managing director of Nabucco Gas Pipeline International, confirmed in a phone interview that he envisions supply coming from two feeder pipelines--one in Georgia, the other in Iran. Nabucco would also possibly transport Iranian natural gas to European consumers.
"In order to secure supplies, every market player--be it a producer, or a transmission system operator, or a downstream operator or a gas trader--wants to diversify the gas portfolio. And that's what we are doing," he said.
Mitschek stressed that Nabucco's role is only to transport the gas and the eventual decision whether to buy Iranian gas will be made by European buyers.
The United States has repeatedly voiced opposition to Iranian involvement in the pipeline, but US companies have no direct stake in the project. However, the US could penalize companies involved in Nabucco through its Iran Sanctions Act.
European Union's reliance on Russian gas has hardly been risk-free. Pricing disputes between Russia and Ukraine have cut off natural-gas supplies to Europe for weeks every winter since 2006, forcing the EU to look for alternatives.
In January, the European Commission pledged to provide 250 million euros ($353 million) for the new pipeline project.
Initially, Nabucco plans to draw from gas fields in northern Iraq, Azerbaijan and elsewhere in Central Asia. But it has yet to secure commitments from these suppliers.
Most of Azerbaijan's natural-gas supply already ends up in Turkey, leaving little to be passed on to Europe. And Russia, whose proposed South Stream pipeline would serve essentially the same market as Nabucco, has already signed several deals in Central Asia to buy up natural-gas supplies in an apparent effort to short-circuit Nabucco.
The $8 billion deal recently signed by the Nabucco consortium with the Kurds of northern Iraq, which would have supplied natural gas, was vetoed by Iraq's oil minister, who said Iraq's Constitution did not allow the Kurds to negotiate oil deals independently. The deal also drew strong criticism from Turkey, which faces its own Kurdish separatists and fears the oil revenue would fuel Iraqi Kurds' aspirations for an independent state.
Iranian Involvement
Russian officials have stated that in order for Nabucco to be viable, it would have to involve Iranian gas. Many western experts have also questioned the pipeline's ability to secure sufficient upstream gas supplies without Iran.
"They definitely need more sources," said Mamuka Tsereteli, a specialist on Eurasia and energy policy at American University in Washington.
Tsereteli said Nabucco is also hampered by the lack of a large stakeholder to take the lead in securing supply deals.
"The key problem with Nabucco always was to have a committed buyer and a committed supplier," he said.
Nonetheless, officials in the countries involved in Nabucco are optimistic.
"I think the likelihood of Nabucco being realized is increasing, not decreasing," said Temuri Yakobashvili, executive director of the Georgian Foundation for Strategic and International Studies, a think tank in Tbilisi.
Yakobashvili also serves as Georgia's minister for reintegration. "We have no doubt Russia is trying to undermine the Nabucco project. At the end of the day with the combination of political and economic leverage when Russia is being so openly aggressive, countries should be alerted," he said.
If Nabucco unravels, the European Union has another alternative--White Stream, which is currently gathering funds for a second stage of feasibility studies.
White Stream would run from Azerbaijan through Georgia and under the Black Sea to Central Europe through Romania and Ukraine. It would not involve Iran.
Although the governments of Georgia and Ukraine have been lobbying heavily for investment in White Stream, experts are skeptical the project will come to fruition.
Cohen said White Stream was nothing more than a trial balloon to speed up Nabucco.
© Iran Daily 2009
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