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Nabucco signs 'milestone' national deals

June 10, 2011 at 6:15 AM   |   Comments

BAKU, Azerbaijan, June 10 (UPI) -- Nabucco natural gas pipeline officials announced legal agreements with five transit countries as EU and Azeri officials met on energy this week in Baku, Azerbaijan.

The governments of Austria, Bulgaria, Hungary, Romania and Turkey have all granted approvals of "project support agreements" for the proposed pipeline, which are meant to provide the legal framework needed for a successful financing of the $10.9 billion project, Nabucco officials said in a Kayseri, Turkey, announcement.

"The signing of the PSAs is a further vital milestone for our project and cements our partnership with the governments of the transit countries," Nabucco Gas Pipeline International GmbH Managing Director Reinhard Mitschek said.

The company described the PSAs as "bilateral, legal agreements specific to each transit country" meant to lock in an "advantageous regulatory transit regime under EU and Turkish energy law" as well as to protect the pipeline from "potential discriminatory changes in the law."

It said the PSAs also serve as general expressions of support for Nabucco project, which would stretch from 2,400 miles from Turkey to Austria, crossing Romania, Bulgaria and Hungary. Supplies could come from Azerbaijan.

Europe aims to break Russia's grip on the regional energy sector with its so-called Southern Corridor of transit networks that includes the Nabucco natural gas pipeline.

Azerbaijan, which is expected to vastly expand its production of natural gas with the opening of its Shah Deniz II field in the Caspian Sea, is expected to decide by late October whether Nabucco, the rival Interconnector Turkey-Greece-Italy project or some other company will gain access to the field.

Turkmenistan and Iraq are also considered the main potential natural gas suppliers for the Nabucco project.

"The negotiations with suppliers are going well and the interest in Nabucco is getting stronger every day," stated Werner Auli, chairman of the Nabucco Steering Committee.

European and U.S. officials gathered this week in Baku for the 18th International Caspian Oil and Gas Exhibition and Conference were greeted with the Nabucco news Wednesday.

Richard Morningstar, the U.S. State Department's special envoy for Eurasian energy, told reporters the political agreements were a good sign for the Nabucco project, even though it has yet to sign supply agreements with Azerbaijan, News.az reported.

"It's certainly helpful," he said. "I think that it shows that the governments involved are still very strongly in favor of a Nabucco pipeline. There are commercial issues that we can talk about but I think it's very helpful that the agreement is being signed."

Also in Baku, EU and Azeri officials met and issued statements that sought to portray their relationship as deepening as the Europe steps up attempts to diversify away from its dependence on Russia for energy supplies.

EU Energy Commissioner Gunther Oettinger declared at a news conference that Europe is serious about developing a long-term gas cooperation agreement with Azerbaijan, the Trend News Agency reported.

"2011 is the year for integral decision making in favor of the EU Azerbaijan long-term economic cooperation, particularly in relation to the gas sector," Oettinger said.

Oettinger met with Azerbaijani President Ilham Aliyev and Foreign Minister Elmar Mammadyarov Monday, talking to them about ways to broaden energy cooperation between them, AzerNews Weekly reported.

Mammadyarov reportedly concentrated on the importance of a joint declaration on gas delivery for Europe signed by Aliyev and visiting European Commission President Jose Manuel Barroso in January.

It commits Azerbaijan to supplying "substantial volumes of gas over the long term to the European Union, while Europe provides access to its market for them."

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