BAKU - There is no real direct competition between Nabucco West and South Stream even after Gazprom decided to abandon the Russian-backed project's southern branch, from Greece via the Adriatic seabed to Italy, focusing more on the Balkans and Central Europe, Nabucco Managing Director Reinhard Mitschek told New Europe in an interview. He was speaking on the sidelines of the World Economic Forum in Baku, focusing on Strategic Dialogue on the Future of the South Caucasus and Central Asia.
“We do not really see South Stream as a competitor to Nabucco West,” Mitschek adding that his consortium has “very good status of negotiations” with Azerbaijan's state oil company SOCAR, BP, Norway’s Statoil and France’s Total, developing the offshore Shah Deniz field in Azerbaijan’s sector of the Caspian Sea. He reminded that Nabucco West has signed a memorandum of understanding with the Tran-Anatolian Pipeline (TANAP) and discussed the technical interface with TANAP. “We have an inter-governmental agreement for Nabucco West with Bulgaria, Romania, Hungary and Austria. We have far developed engineering and the decision will be taken now in two-three months time and I’m confident Nabucco will be realised so I don’t really see a real direct competition between South Stream and Nabucco,” Mitschek said.
Arriving by TANAP at Turkey's western border, 10 billion cubic metres of Azerbaijani gas could be forwarded either through the Nabucco-West route through Bulgaria, Romania and Hungary to the gas distribution hub at Baumgarten in Austria, or alternatively through the Trans-Adriatic Pipeline (TAP) via Greece and Albania to Italy.
The Shah Deniz field partners have started to evaluate final bids received from TAP and Nabucco and are expected to make a decision by the end of June.
For its part, South Stream will pass through Turkish waters to Bulgaria, and then continue on through Serbia, Hungary, Slovenia, and Austria to tie in with the distribution network of the multinational ENI in northern Italy. Analysts say Gazprom prioritised South Stream in Southeast and Central Europe, so as to defend Gazprom's near-monopoly there against potential competition from Nabucco.
But former US ambassador to Azerbaijan, Matthew Bryza, told New Europe in Baku that he thinks South Stream is in trouble. “I’ve always thought it [South Stream] was the most uneconomic project in the region that was designed for one purpose, which was not to bypass Ukraine but to intimidate investors not to do the Southern Corridor and I think that as the Southern Corridor becomes clearly a reality, I believe you will see South Stream’s momentum fade,” Bryza said.
Meanwhile, Mitschek said the Balkans is a priority for Nabucco West. “We have a direct Nabucco market that is Bulgaria, Romania, Hungary and Austria; we have a neighbouring market that is all the countries in western Balkans and we have an associated market that includes Slovakia, Czech Republic, Poland, Germany and France. All these markets can be easily reached by Nabucco and therefore we can offer to the Azeris here not only the 60-billion-cubic-metre market in southeast Europe but the whole 500-billion-cubic-metre market in Europe,” the Nabucco managing director said.
The European Commission has invested a lot of political capital in Nabucco but recently is equally supporting both Nabucco and TAP.
Mitschek said his project has to prove commerciality because shareholders in Nabucco are stock-listed companies and by definition this project has to be commercial. “We enjoy the political support from the Commission, from the state parties involved, we are listed for funding from the Commission and all the support we need we have,” he said. “I have no reason to complain and, as I said, it’s not a purely strategic, political project. It has to prove commerciality and I’m sure we can prove commerciality and we can prove that we are the most competitive project in the so-called Southern Corridor,” he said.
Asked if there a Plan B for Nabucco and whether the project will be scrapped if is not selected by the Shah Deniz consortium, Mitschek responded: “Not necessarily”. He stressed that Nabucco West is a multi-sourcing project. “Nabucco started as a multi-sourcing project and remains multi-sourcing. That means gas from Azerbaijan is our first priority and it will be perhaps the first gas. But there is also gas from Iraq, there is gas from the Black Sea offshore and some other sources so I’m confident that not only first gas will be Azerbaijan but there will not only be Azeri gas in the pipeline. We offer transports from Turkey to the north; we offer transports from the central European gas hub down to the south in the reverse flow transaction; we offer short-term, long-term transactions,” he said. “With our set of services we offer to the market, we are very attractive for a lot of business opportunities.”
