2nd UPDATE: RWE: Nabucco Gas Supply Deals Unlikely In 1st Half 2010
05 May 2010 - 12:13AM
Dow Jones News
German utility RWE AG (RWE.XE), a member of the consortium that
plans to build the natural gas pipeline Nabucco, said Tuesday it no
longer expects gas supply deals with Azerbaijan and Turkmenistan
will be signed in the first half of 2010 in light of pending
political agreements.
Stefan Judisch, chief executive of RWE's supply and energy
trading unit also ruled out that costs for the 3,300 kilometer
pipeline would rise above the currently forecast EUR7.9
billion.
Judisch said that the consortium is reviewing the costs of the
project, adding that they're "more likely to fall than rise".
Lower construction costs would primarily be the result of an
alternative feeder pipeline that would connect gas fields in north
Iraq to the Nabucco project, he said.
Nabucco shareholders OMV AG (OMV.VI) of Austria and Hungary's
MOL Nyrt (MOL.BU) own a combined stake of around 20% in two
northern Iraqi gas fields.
Construction costs could be reduced by extending an existing
pipeline operated by Turkey's Botas to feed Nabucco with gas,
Judisch said. This option is being examined, he said.
Iraq and Turkmenistan are the most likely initial supply sources
for Nabucco. Azerbaijan is also expected to be a supplier for the
project.
The original target of striking supply deals with Azerbaijan and
Turkmenistan is now unlikely to be reached, said Judisch.
"We expect to reach results [in terms of supply deals] in coming
months," he added.
Judisch added, however, that a final investment decision is
still expected to be made before the end of the year and first gas
will likely flow in 2014.
Judisch said that Turkmenistan has repeatedly reassured that it
will stick to its commitment to supply Nabucco with gas. He added,
however, that Turkmenistan has subsequently expressed its desire to
"safeguard" its supply commitment via a bilateral agreement with
Germany.
Judisch said that such a procedure was understandable for a
country that is in the process of drastically altering its energy
export policy.
Turkmenistan--a former Soviet republic--has a long history of
supplying gas to Russia, but is seeking to diversify its gas
exports in deals with customers in Europe and Asia.
RWE's Judisch also said that there have been "positive signals"
in terms of Nabucco gas supplies from Azerbaijan, which appears to
be nearing an agreement with Turkey over the pricing of existing
gas deliveries. Azerbaijan supplies around six billion cubic meters
of natural gas to Turkey.
Such an agreement could pave the way for a deal over gas
supplies for Nabucco, Judisch said, adding the two countries could
sign such an accord in May.
The pipeline, slated to transport gas from the Caspian region to
central Europe via Turkey and Austria, is considered crucial to
secure Europe's growing demand for natural gas as domestic supply
is steadily falling.
With a planned capacity of up to 31 billion cubic meters of gas
a year, Nabucco would further diversify Europe's supply sources,
bypassing traditional pipeline routes for Russian gas.
The Nabucco consortium comprises German utility RWE, Austria's
OMV, Hungary's MOL, Turkey's Botas, Bulgaria's Bulgarian Energy
Holding and Romania's Transgaz.
Company website: www.rwe.com
-By Jan Hromadko, Dow Jones Newswires; +49 69 29 725 503;
jan.hromadko@dowjones.com
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