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“Nabucco West” Submits Proposal

Published: May 18, 2012; 17:26 · (Vindobona)

The proposal for the downsized “Nabucco West” Scenario was submitted to Shah Deniz II Consortium.

“Nabucco West” Submits Proposal / Picture: © Vindobona.org

The Nabucco Consortium today submitted a proposal to the Shah Deniz II Consortium for the construction of a “Nabucco West” pipeline, which would bring Caspian gas from the Bulgarian-Turkish border to Baumgarten and beyond.

“We are convinced that we have submitted a competitive and comprehensive proposal to the Shah Deniz II Consortium, and that this proposal represents a win-win situation for our shareholders and for suppliers alike”, said Reinhard Mitschek, Managing Director of Nabucco Gas Pipeline International GmbH.

Nabucco West is a modified concept of the Nabucco project. The concept foresees the construction of a 1300 km pipeline that will run from the Bulgarian/Turkish border to the Central European Gas Hub. The pipeline is designed to transport gas initially from Azerbaijan and is fully scalable to meet future gas transport demand from the Caspian Region and Middle-East to the European markets. Nabucco West will benefit from the existing legal framework, namely the Intergovernmental Agreement, Project Support Agreements and third party access exemptions as the Nabucco base case and will follow exactly the same route on European Union territory.

At the moment, Nabucco faces severe difficulties. The German consortium member RWE is concerned about the rising cost expectations. Planned costs of the initial project were expected to rise from € 8.0bn to € 15bn. The new “Nabucco West” scenario would cost € 1.0bn for each consortium partner. Nevertheless, RWE officially considered leaving the project. Moreover, Nabucco still has no firm delivery contracts with Azerbaijan and Turkmenistan. RWE currently negotiates with Ukraine over gas delivery contracts.

Also the Hungarian MOL confirmed to exit the project in April. Even more, MOL is said to take a sounding with the rival project SEEP (South East Europe Pipeline). MOL fears a cost explosion and criticized the lack in definite delivery contracts. SEEP is a project by BP, which was introduced only a few months ago. BP also operates the Azerbaijani gas filed Shah Deniz together with the Norwegian Statoil.