The grand EU's Nabucco dream to build a 4,000km gas pipeline linking the heart of Europe with Caspian and Central Asian suppliers is finally officially dead, it appears. The admission came on May 16 as the Nabucco Consortium submitted a proposal for the smaller Nabucco West to carry gas from the giant Shah Deniz field in Azerbaijan.
Meeting the deadline set by the Shah Deniz consortium - led by BP - for proposals to ship 16bn cubic metres of its gas to Europe, the Vienna-based Nabucco Consortium announced that it has pitched Nabucco West - set to run 1,300km from Baumgarten in Austria to link up with the planned Trans-Anatolian (Tanap) pipeline on the Trukish border.
"We are convinced that we have submitted a competitive and comprehensive proposal to the Shah Deniz 2 Consortium, and that this proposal represents a win-win situation for our shareholders and for suppliers alike," said Reinhard Mitschek, managing director of Nabucco Gas Pipeline International, according to Reuters.
He also stressed that the scaled-down project can still source other gas. "The pipeline is designed to transport gas initially from Azerbaijan and is fully scalable to meet future gas transport demand from the Caspian Region and Middle-East to the European markets," he claimed. Austria's OMV - a member of the Nabucco constorium - has said recently that Nabucco will be vital for its JV with Exxon Mobil in the Black Sea.
Beset by problems - not least of which has been a failure to secure any of the 31bn cm of gas needed to fill it annually - the original Nabucco had been faltering for years as it strove to provide an alternative to Russian routed supplies. The European companies behind it have been warding off suggestions that they have abandoned the grand scheme since late last year.
However, with the Shah Deniz deadline approaching, and Russia applying pressure on European partners for its own super-sized South Stream plan, the cracks really began to open, with Hungary's Mol announcing it was ready to sell its stake in April, and Germany's RWE once more expressing concern this month.
Shah Deniz made no bones about its view. "Nabucco classic is dead. That option is now clearly off the table," stated Al Cook, BP's vice president for the field at the Second Annual Azerbaijan Investment Summit in April, who heads pipeline negotiations.
The Azeris, together with their increasingly good friends in Georgia, will build a pipeline known as SCPX to the Turkish border, where Tanap will take over. Shah Deniz now has to choose between two potential routes as the gas reaches Europe: a southern pipeline running across the Balkans and under the sea to Italy, and a northern route across Bulgaria, Romania and Hungary to dock in Austria. Shah Deniz is expected to announce the winning pipeline in 2013.
Nabucco West is initially competing for the latter route with the South East European Pipeline (SEEP) in a first round of competition. SEEP, which is also led by BP, would mainly use existing infrastructure to pump the gas through Hungary and into western Europe. Mol said this week that it may jump ship to join the project.
Meanwhile, the Trans Adriatic Pipeline (TAP) - led by Norway's Statoil, also a member of the Shah Deniz consortium - plans to pump the gas through existing Turkish infrastructure and on through Greece and Albania to an Italian hub.