The European Union and the energy ministers of Austria, Hungary, Romania, Bulgaria and Turkey on June 26 agreed to go ahead with the construction of the Nabucco gas pipeline, Agence France Presse (AFP) reported from Vienna. The pipeline will enable Europe to reduce its dependence on Russian gas, AFP said. In a joint declaration and in the presence of EU Energy Commissioner Andris Piebalgs, the ministers agreed to build the 3300 km Nabucco pipeline that will guarantee the supply of about 30 billion cubic metres of gas a year from Iran to Central Europe by 2015.

Five companies - Turkey’s Botas, Bulgaria’s Bulgargaz, Transgaz of Romania, Hungary’s Mol and Austria’s OMV Gas - have formed a joint venture, Nabucco Gas Pipeline International, to convey the gas from Iranian fields in the Caspian Sea to Central and Western Europe. The cost of the pipeline is estimated at 4.6 billion euro. According to predictions by the European Commission, which financed a pipeline feasibility study, between 10 and 15 per cent of the EU’s gas supply will come from the Caspian Sea region by 2025.

The final decision on the start of construction should be made in 2007 with work expected to finish in 2011. First, the regulation of third-party access to the pipeline, which is subject to a European directive, will have to be resolved. Third-party access concerns the rights of companies outside of the joint venture to gain access to the pipeline infrastructure. The gas crisis that erupted in January between Russia and Ukraine showed the need to find new sources of energy and new means of transport, Piebalgs said. Austrian energy minister Martin Bartenstein, whose country holds the EU presidency until June 30, said “Nabucco represents a key element in European energy policy”. He said that Nabucco would not compete with the South European Gas Pipeline project that Russian gas giant Gazprom and Hungarian energy group Mol have agreed to develop jointly. “Nabucco will cover only 10 per cent of the EU’s future gas needs and we will use all the supply possibilities on offer,” Bartenstein said.

By 2025, the EU will need another 250 billion to 300 billion cubic metres of additional gas, the minister said. The EU currently uses about 500 billion cubic metres of gas. For Piebalgs, the South European Pipeline project is “still not concrete enough” to be taken into account. “We have to concentrate on Nabucco,” he said. In late April, Gazprom, the world’s largest oil and gas producer and exporter, threatened to look to other markets outside Europe for its exports. AFP said that OMV gas director Otto Musilek had said recently that “Europe’s gas needs will increase enormously and Russia will not be able to handle them alone”. He said that it was important to have access to the world’s second-largest gas reserves in Iran. Experts estimate the Middle East’s total gas reserves at 80 000 billion cubic metres.