There were plenty of reports over the weekend about a glorious new agreement signed in Prague that will advance the Nabucco pipeline project – an ambitious €9bn plan to diversity Europe’s gas supplies, and reduce dependence on Russia in particular. Czech Prime Minister Mirek Topolanek described it as “a new silk road” as a deal was signed by leaders from Europe, Azerbaijan, Turkey and Georgia.
But just hang on a minute. Where are the other gas suppliers? Here is the roll call from the EU’s own press release of countries attending:
“The participating partner countries are Azerbaijan, Egypt, Georgia, Iraq, Kazakhstan, Turkey, Turkmenistan and Uzbekistan.”
In otherwords, this particular agreement – for reasons not yet clear to us – did not include several of the big gas suppliers, although they had been invited to the summit. Although the core Nabucco does not extend beyond eastern Turkey, securing enough gas to fill the pipeline is crucial. So far only one fifth of the gas required has been secured, and private financing of the pipeline will be difficult if that shortfall is not addressed.
Turkmenistan and Kazakhstan have significant natural gas reserves, but Russia’s Gazprom is also pursuing the pursuing the supplies of the former Soviet republics. While a Turkmenistan-EU agreement was heralded last year, its involvement is far from guaranteed, and China is also interested in its sizeable gas deposits.
The agreement does appear to represent some progress. Setting up a central gas buying consortium for the EU would address a logistical problem, and smoothing the terms of transport are important – particularly if this Guardian story that Turkey has agreed terms that are acceptable for the EU. About half of the pipeline would be laid through Turkey, and negotiations, and that has held out for ‘hub’ status and access to discounted gas, terms on which the EU says the pipeline will not be economically viable.
But some significant hurdles remain for Nabucco.