As Hungarian oil and gas company MOL pulls out of the proposed Nabucco pipeline project, some have suggested that the Nabucco project might be ‘jinxed’ and must be downsized in order for it to survive.
Nabucco was conceived in order to carve a southern transport route for natural gas from the Caspian Sea to Europe – a route that bypasses Russia. Shareholders are RWE (Germany), OMV (Austria), Botas (Turkey), BEH (Bulgaria) and Transgaz (Romania). MOL’s withdrawal of any further funding is a blow to a project that is already experiencing setbacks and difficulties.
There have been no supply contracts agreed for the pipeline thus far and there are serious concerns over where the gas will come from to fill the pipeline. Nabucco is one of a few candidates hoping to receive gas from the Shah Deniz II field in Azerbaijan, which has just entered into its Front End Engineering and Design (FEED) operations. Shah Deniz, being developed by BP, Statoil and Azeri state energy company SOCAR, is estimated to contain 1.2 trillion m³ of gas. The second phase is estimated to be in operation by 2017, producing 16 billion m³/yr of gas. Selection of the preferred export route will be made in 2013 – with several projects vying for gas supplies. Among them are Nabucco, Trans Adriatic Pipeline (TAP), and BP-led South East Europe Pipeline (SEEP).
In the light of such serious competition – and as the European Commission withdraws its support for the project, declaring itself “project neutral” as far as the Southern Corridor routes go – some suggest that the US$ 12 billion Nabucco pipeline should lower its expectations and repackage itself in a different design. OMV has begun developing a smaller version of the project, termed Nabucco West, which would mean the pipeline begins at Turkey’s border, significantly reducing its length.
While we wait to see which Southern Corridor pipeline is chosen and how Nabucco might survive the cut, or survive at all, it’s interesting to note that the proposed project is named after a Verdi opera. Giuseppe Verdi was on the verge of giving up opera when – to the eternal gratitude of music lovers everywhere – his third opera, Nabucco, met with huge success and launched the young composer’s career.
Written by Elizabeth Morant, Editor of World Pipelines magazine.