Historical background
Gas represents a promising and contemporary primary energy source positively impacting the environment and generating a genuine interest. The current energy demand of various economies is the key initiative for new investments in the gas sector presently focusing on gas transmission to markets in demand of such commodity. The highly industrial European energy demand is gradually increasing and the lack of an additional primary energy source shall cause a steady growth of the gas demand in the near future. Moreover, the diversification of the supply sources meant to cover the growing energy demand constitutes a sensitive aspect of the European energy policies.
Therefore, the Nabucco Project initiated by five companies in the field, i.e. BOTAS - Turkey, BULGARGAZ - Bulgaria, TRANSGAZ – Romania, MOL - Hungary and OMV Erdgas - Austria was meant to connect and capitalize the promising gas reserves of the Caspian Region and Middle East to the European markets.
The five companies signed a Co-operation Agreement on the establishment of a Consortium intended to execute a “Feasibility Study” on the creation of a brand new gas transmission route from the above-mentioned production regions, by building a pipeline on the territory of the five countries from the Turkish – Georgian and Iranian borders to Baumgarten, Austria (key hub collecting Russian gas to be transited to Western Europe). Furthermore, the connection to the Nabucco pipeline of other available gas sources of the region (Syria, Iraq, and Egypt) shall be considered.
The planned route of the Nabucco Pipeline
The significance of this project was acknowledged by the community bodies and materialized in the European Commission’s inclusion of such project in the TEN (Trans European Network) programme, precisely on the list of priority projects. Such inclusion entails the financing of 50% of the study achievement value by the European Commission, the rest of necessary funds being ensured by the five companies’ own funds.
Nabucco Pipeline Market
Around Europe, there are sufficient sources to cover the estimated increase in gas demand for the following decades, but at the moment there are not enough opportunities for such gas volume transmission to European gas markets.
On the other hand, taking into account the fact that certain central Western European and Balkan regions are closer to the Caspian Sea than to other gas sources (mainly Russia), Nabucco Project proves quite a competitive project. Such assumptions have been justified by the market analysis. The results thereof illustrate a potential volume to be transmitted of 8 bcm in 2011 and gradually growing to 25-31 bcm in 2020.
Gas reserves around Europe.
Consequently, it is worth stating that the feasibility of the Nabucco project consists of:
- The competitive character in terms of costs and implicitly of forecasted transmission tariffs as opposed to other new projects;
- Security of supply due to large gas fields of the Caspian and Middle East regions;
- Diversity of supplies to target markets as opposed to current sources;
- The fact that the Nabucco partners take over gas quantities to partially cover future demands;
- Constant increase in the gas consumption of the European highly industrialized countries based on the gradual (medium and long term) decrease in the North Sea gas deliveries and the downgrading of the Russian gas transmission infrastructure;
- High costs related to the delivery of LNG produced by Maghreb countries (North Africa).
Gas forecasts – OECD EUROPE
As there are no delivery corridors between the intended gas sources and the target consumption areas, Nabucco may provide a gas source to the European market, thus playing an important role in the increase of European gas market competitiveness, in terms of fostering the opening of such markets, including the countries in process of adhesion.
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