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Nabucco's Supplying Natural-Gas Fields May Cost Twice as Much as Pipeline
Development of natural-gas supplies for the planned Nabucco pipeline, intended to reduce European dependence on Russian fuel, may cost more than twice as much as the 7.9 billion-euro ($10.5 billion) link itself.
The total cost to construct Nabucco will be at least 25 billion euros, including the development cost of the supplying gas fields in the Caspian, Middle East and northern Africa, Raiffeisen Centrobank AG said in an investor note obtained by Bloomberg, citing a presentation by Nabucco shareholder OMV AG.
Nabucco is intended to stretch more than 3,300 kilometers (2,050 miles) from Turkey to Austria to bring Caspian natural gas to Europe and reduce the region’s dependence on Russia. The OMV-led project has been bogged down over financing, pricing and politics.
The cost for the development of the gas sources won’t be solely met by Nabucco’s six shareholders, according to the Raiffeisen note, a copy of which was obtained by Bloomberg News.
“The costs for the planned Nabucco pipeline are still valid at 7.9 billion euros,” Michaela Huber, a spokeswoman for OMV in Vienna, said in an e-mailed statement. “All other costs and additional investments in regard to other projects are not to be calculated as additional costs for the Nabucco pipeline.”
Nabucco’s shareholders, which also include Germany’s RWE AG, are seeking to secure as much as 31 billion cubic meters (1.1 trillion cubic feet) of gas a year for the pipeline. The venture is vying with Asian and Russian projects to access Caspian, Central Asian and Persian Gulf supplies.
Finding Supplies
The link aims to tap gas from Iraq, Azerbaijan and is also is in talks with Turkmenistan. Gas would flow into Turkey from three of four possible competing entry points: Georgia, Iran, Iraq and Syria, according to the European Union.
The EU last May approved 200 million euros in investment for Nabucco, after the European Investment Bank said it may finance as much as 25 percent of the project. Nabucco’s partners, which also include Hungary’s Mol Nyrt., Bulgaria’s Bulgargaz EAD, Romania’s Transgaz SA and Ankara-based Botas, are set to finance 30 percent of the project.
The venture partners will decide on the investment by the end of this year, with construction set to begin in 2011 and with fuel flowing from the end of 2014 or the start of 2015, according to Nabucco’s Web site.
To contact the reporter on this story: Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net
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