"Pearl is very important because they have access to a major gas field. It has the capacity to produce an important part of the supply of Nabucco," said the company's Chief Executive Wolfgang Ruttenstorfer at a press briefing in London. "The gas is there and could be available in five years."
OMV owns a 10% stake in Pearl.
The 3,300 kilometer Nabucco pipeline is an ambitious project that aims to open a new supply route for Central Asian and Middle Eastern gas to Europe via Turkey, Bulgaria, Romania, Hungary and Austria. The project has the backing of the European Union, which sees it as a way to reduce dependency on imports of Russian natural gas.
OMV, Germany's RWE AG (RWE.XE), Turkey's Botas, Bulgarian Energy Holding, Romania's Transgaz and Hungary's MOL Nyrt. (MOL.BU) are members of the Nabucco consortium. They plan to decide whether to proceed with the project in the fourth quarter of 2010, with operation due to commence in 2014.
Gas fields in northern Iraq could be developed in several years and linked fairly quickly to Turkey through an inexpensive feeder pipeline, Ruttenstorfer said. He added that he is confident that political tensions over energy exports from the Kurdish region of Iraq will have been resolved within the time frame of the Nabucco project.
The economic downturn that has left Europe with a surplus of gas has not fundamentally changed the viability of Nabucco, said Ruttenstorfer. "We are going to have an oversupply of gas in Europe for the next three to five years," he said, but after that the region will see its need for gas imports rising again.
The downturn has also had little impact on the projected EUR7.9 billion cost of the pipeline, said Ruttenstorfer.
Partners in the Nabucco consortium will need to secure around half of the pipelines planned 31 billion cubic meter a year capacity in order for the project to get the go-ahead as scheduled for the fourth quarter of 2010.
In addition to Iraq, around half this gas will probably have to come from Azerbaijan, so the decision from BP PLC (BP), Azeri state oil company Socar and their partners on whether to proceed with the second phase of the Shah Deniz gas project will be crucial, Ruttenstorfer said.
Many Nabucco consortium members are talking to the Azeris about gas supply, he said.
Richard Morningstar, the U.S. special envoy for Eurasian energy, warned that Nabucco companies could look for alternative options if Baku and Ankara cannot resolve their issues, the Azeri Press Agency reports.
"A failure to find an agreement would lead energy companies to search for different routes," he said.
Baku has considered raising the price of the gas purchased by Ankara from the Shah Deniz gas field.
The offshore Shah Deniz field has the capacity to produce 318 billion feet of gas from its initial phase, with another 706 billion cubic feet expected from Phase 2 by 2012.
Partners to the Nabucco gas pipeline for the European Union aim to diversify the regional energy sector by courting Central Asian and Middle Eastern suppliers to the project.
Morningstar told an audience at the European Policy Center in Brussels that outstanding price negotiations were moving forward, but the importance of a resolution could not be underestimated.
"We strongly encourage Turkey and Azerbaijan to agree on pricing terms because the agreement is needed to win the trust of the participating companies in the Nabucco pipeline project," he said.
Nabucco partners are eyeing Azerbaijan, Turkey and Iraq as potential suppliers for the project. Morningstar stressed that Iranian gas is not a consideration.
"Territorial integrity of Azerbaijan is as sacred as our own integrity.
"The events that occurred in the Caucasus in August 2008, proved that the situation threatening to security, stability and interaction, is prevailing in the region. In this view, we have proposed the Caucasus Stability and Cooperation Platform and invited all the countries which are parties to the conflict, including Armenia, to join the platform. We have initiated a dialogue with Armenia which has accelerated recently. The Turkish-Armenian protocols signed on October 10 are not harmful for the Azerbaijani interests", he said.
Janan Aritman asked whether Nabucco project will be stopped with the opening of the Turkish- Armenian border. When answering the question, Davutoghlu said Nabucco project has nothing to do with normalization of relations with Armenia.
Kazakhstan wants to leave politics out of the equation and make a profit when dealing with the transport of hydrocarbons, the country’s foreign minister told five visiting western journalists at his lavish ministry in Astana. “The fundamental principle from which we are proceeding on exporting our resources is the principle of economic feasibility - no politics there. We have exported and will be exporting in any direction that is profitable for us,” Kanat Saudabayev said on 23 November. He was responding to a question from New Europe on whether the energy-rich former Soviet republic had any preference over Russian, Chinese or EU-bound projects competing for its rich oil and gas resources.
The relatively new foreign minister reminded that the Turkmenistan-Kazakhstan-China gas pipeline is due to be inaugurated on December 15 and there is already an oil pipeline from western Kazakhstan to western China. Kazakhstan also exports its oil through a whole system of pipelines running through Russia (CPC). Moreover, Kazakhstan ships oil through the Aktau-Tbilisi-Ceyhan pipeline system.
“Given that we will be producing 170 million tons of oil out of which 130 million tons of oil will be available for exports it is in our deep interests to see the multiple export pipelines realized,” Saudabayev said. The bulk of the new volumes would come from Kashagan’s massive oil field, which plans to start commercial production around 2015. “Kazakhstan is and has been turning into a more significant player on the energy market for the European consumers and we will continue to export oil resources through those means that are profitable for us. Kazakhstan as a partner has always been distinguished by its reliability and predictability,” Saudabayev said.
The question is how this oil will be transported. There are several options, including the expansion of the CPC pipeline to Novorossiysk and also using the route to China.
Regarding the issue of bypassing the crowded Bosporus, the Burgas-Alexandroupolis oil pipeline seems to have stalled. Russia seems to prefer the Samsun-Ceyhan pipeline route through Turkey due to foot-dragging by Bulgaria but also to lure Turkey into supporting the South Stream gas pipeline over Nabucco, Chris Weafer, chief strategist at Uralsib bank, told New Europe from Moscow.
“I assume that both by-pass pipes will eventually be built to cut congestion in the Bosporus. Russia will want to send more shipping with non-oil cargos via the narrow channel as it expands the economy and operations at Novorossiysk port. So it needs to divert as much oil into pipes as possible as quickly as possible,” Weafer said. Kazakh President Nursultan Nazarbayev supported Samsun–Ceyhan during his latest visit to Turkey.
Asked by New Europe if Kazakhstan was economically interested in the Nabucco pipeline, Kazakhstan’s Minister of Economic Affairs and Budget Planning Bakhyt Sultanov said that his country is interested in different ways to export its oil and gas resources. “In the case of Nabucco the main question is resources. If we’ll have resources we can sell through Russia, through Nabucco, though our partners,” he said at the sidelines of a forum to discuss Kazakhstan’s OSCE chairmanship and its priorities.
For now, it seems as if Nabucco has been out-maneuvered by Russia and China and is in real danger of having nowhere to turn to for gas supplies. “The commercial case for South Stream and Nabucco looks increasingly unsound,” Weafer said. “They are both now political projects.”
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