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Nabucco makes the first step towards finding funding

Published on , , Sofia

The assessment procedure of the Nabucco project has started last week. It is needed in order Europe's gas pipeline to obtain the necessary funding for its construction worth four billion euros. The European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), The International Finance Corporation (IFC, part of the World Bank Group) and the shareholders of Nabucco and NABUCCO Gas Pipeline International GmbH (NIC) have signed a mandate letter, which practically gives a start of the work on raising funding for the project.

Up to 2 billion euros will be provided by the EIB, up to 1.2 billion by the EBRD and 800 million from IFC. The Nabucco shareholders (with 16.67% each) are the Bulgarian Energy Holding (Bulgaria), Botas (Turkey), MOL (Hungary), OMV (Austria), RWE (Germany) and Transgaz (Romania). They are responsible for providing gas supply contracts, which will enable Nabucco fulfill its purpose: to achieve “energy security via the diversification of gas routes and gas supplies”. For this purpose, gas supplies must be ensured from the Middle East and the Caspian region. According to information from the NIC from August 23rd, the pipe will receive gas from Azerbaijan, Turkmenistan and Iraq, but not from Iran “due to the current political situation”. High hopes are invested on Azerbaijan, which Commissioner Guenter Oettinger has defined as a "strategic European partner".

But:

Only three days earlier the Russian state monopoly Gazprom has signed an agreement with the State Oil Company of Azerbaijan (SOCAR) for the purchase of natural gas, according to which in 2011 the volume of gas purchased by Russia will increase double - to 2 billion cubic meters a year and by 2012 - this quantity will be exceeded.

According to the Chairman of the Management Committee of Gazprom, Alexey Miller, the expansion of gas cooperation between Moscow and Baku is “the most economically beneficial option for both partners”: "It is absolutely clear therefore, that Azerbaijan gives priority to increasing its export volumes particularly for Russia. It is widely known that the Russian direction is the most reliable and secure transmission corridor for Azerbaijani gas".

It is also clear that Russia doesn't want the alternative Nabucco to be realised and is lobbying for its own project South Stream, thus proving itself as a reliable European partner in Nord Stream. Nord Stream “represents our contribution to guaranteeing Europe’s energy security”, said earlier this year Russian President Dmitry Medvedev.

Whether Russia will succeed in its attempts to hinder, if not foiling, European demand for energy security by diversifying supplies, depends mainly on when Europe will be able to formulate unequivocally its common energy policy and will begin to assert its objectives in practice in the name of the European interest, rather than in the interest of the individual (and dominant) Member States. Until then, however, Russia will continue to buy gas and sell dependence.

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