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Nabucco Pipeline Project Finally Gets Going

This could be very, very big....

This hasn’t gotten much mention here – but when I was in Romania earlier in the week it was big, big news:

The troubled Nabucco pipeline project — designed to diversify Europe’s energy supply and loosen Russia’s grip on the continent’s natural gas market — took a major step forward on July 13 with the signing of a transit agreement between Turkey and five European Union countries involved in the undertaking.

The 2,050-mile-long (3,300 kilometer) Nabucco pipeline is designed to bring gas from the Caspian Basin and the Middle East to European markets via Turkey, Bulgaria, Romania, Hungary and Austria. The $10-billion pipeline is scheduled to start operating in 2014. Nabucco’s primary objective is to lessen Europe’s overdependence on Russia for gas. Moscow currently supplies approximately 40 percent of Europe’s gas.

But there’s even more good going on, which we’ll discuss below the fold.

We can grasp the multifaceted significance of this project simply by looking at a reasonable map:

The main stem of Nabucco will run from Erzurum to Vienna. The most important factor in the route is that it bypasses the Russian-originated routes that run through Russia and Ukraine – and which have been the source of so much friction and Russian bullying. Given Europe’s over-dependence on Russian gas supplies (thanks in part to Germany’s mindless and idiotic “green energy” drive), this allows a route free of that problem.

The main unresolved issue is simply – who will be the gas suppliers? The map provides a hint. The most important source is Azerbaijan – since the already-extant Baku-Tbilisi-Ceyhan (that last is on the Turkish Black Sea coast) oil pipeline already follows a trans-Caucasus corridor that is free of Russian meddling.

The map also shows that Iran could be a supplier – however, this is politically difficult (and not included in the agreement); in addition, Iran’s gas infrastructure is in such terrible shape that Iran is actually now an importer of natural gas.

Another potential supplier is gas-rich Turkmenistan – on the far side of the Caspian from Azerbaijan. This seems to be likely, given that Turkmenistan is landlocked and overly dependent on Russian transit pipelines for getting its gas to market.

The most intriguing possible supplier, though, is Iraq. Iraqi Prime Minister Maliki was in Ankara Monday for the signing ceremony – and Iraqi participation seems to be a good idea all around.

This agreement on Monday is just that – a starting point. There is much work and planning to be done – but it’s good to see this bird finally get into the air.

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