The proposed Nabucco Pipeline would connect gas rich Turkmenistan to Austria, offering energy-hungry Continental Europe with an alternative to Russian gas. However, disagreements between participating nations combined with the possibility of increased European shale-gas production threaten to indefinitely delay construction of the pipeline. Alexandros Petersen of the Atlantic Council analyzes the hurdles to completing the project.

The Nabucco gas mega-project, a single gas line running from Turkey to Austria, has been long touted as a significant development for European gas markets and the key to European energy security, but if it does not advance this year the shale gas revolution could significantly reshuffle plans for the future of the pipeline, which has already been on hold for almost a decade. According to the pipelines consortium members, the European Commission and key experts on the projects prospects, if Nabucco does not realize key steps forward this year, the long-running ambition could fade away just as many Eurasian pipeline dreams have before it. The specific purpose of the pipeline was to diversify Central and Eastern European gas markets away from Russian resources by connecting continental Europe with Eurasia through Turkey. However, the future of the pipeline has implications for EU energy unity, NATO cohesion, and prospects for Western integration in the energy-rich Black Sea/Caspian region.

Hopes for the Pipeline, Rifts Among Consortium Members

The Nabucco natural gas pipeline, named for Verdis opera about the ancient Hebrews escaping bondage in Babylon, would snake (downstream to upstream) from Austrias Central European gas hub at Baumgarten through Hungary, Romania, and Bulgaria to Erzurum in eastern Turkey, where it would connect with an enlarged South Caucasus Pipeline that would run north through Georgia and Azerbaijan to Caspian reserves. From here, Nabucco could potentially tap into Turkmenistans immense natural gas reserves through a Trans-Caspian pipeline. It could also split in central Turkey, with a spur heading south to gas fields in Iraqs Kurdish regions. Consortium members OMV (Austria) and MOL (Hungary) have invested in the development of the Khor Mor and Chemchamal gas fields in northern Iraq, while Germanys RWE is negotiating heavily in Ashgabat, the Turkmen capital. The rest of the consortiums members, Bulgarias BEH, Romanias Transgaz and Turkeys BOTAS are counting on anywhere from 4.5 to 8 billion cubic meters (bcm) a year from Azerbaijan to kick-start the planned 31 bcm pipeline project.

After eight years of pushing the project with lackluster results, there are signs that this year may be a critical turning point; rifts have been growing among consortium members that will not be patched up unless Nabucco sees progress this year. For all intents and purposes, progress means securing substantial private sector financing. On March 4, the European Commission pledged 273 million USD to aid in the estimated 11 billion USD pipelines construction. At first glance this is not a significant contribution, but it is the first time that the EU has pledged to a pipeline project, and could serve as important reputational backing for corporate investment. It also helps that the same week saw the Turkish parliament formally approve Nabucco, which means that the governments of all five transit states have signed off on the project.

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