with Nabucco wounded......./europe on line


With Nabucco wounded, Putin closes in for the kill

Hungary’s MOL said earlier last week it considered further financing of Nabucco unsustainable and had therefore not approved its 2012 budget. Hungary’s Prime Minister Viktor Orban added that Nabucco was “in trouble”. Instead, Budapest threw its weight behind the Russian-backed rival South Stream pipeline.
Nabucco is also facing competition from the South-East Europe Pipeline (SEEP). BP and its partners in the Caspian Sea developing Azerbaijan’s Shah Deniz gas field plan to make a final decision on an export route to Europe by the middle of 2013. The group will choose between Nabucco and the SEEP by the middle of this year. The Trans-Adriatic Pipeline (TAP) is also vying to carry gas from Azerbaijan to Europe and will face off with either Nabucco or SEEP. 
Julian Lee, senior energy analyst at the Centre for Global Energy Studies (CGES) in London, agreed that MOL’s withdrawal possibly casts doubt over the stability of Nabucco. But he noted that it also opens up the chance for new shareholders to be brought into the reconfigured Nabucco. “I think for it to stand a chance against SEEP, it will be necessary for SOCAR and perhaps some of the Shah Deniz shareholders to have an equity stake in Nabucco. SOCAR has shown that it wants to hold equity in the pipelines used to deliver its oil and gas to market,” Lee told New Europe on 27 April.
An EU spokeswoman said on 27 April that the Commission’s position “remains unchanged”. She reiterated that Nabucco, benefitting from an intergovernmental agreement between all countries concerned, meets the EU's strategic interest in opening the Southern Corridor. “But the Commission is neutral where the gas ends up in Europe and the Commission supports all pipelines in the EU, not only Nabucco but also TAP for example,” she said.
Chris Weafer, chief strategist at Troika Dialogue in Moscow, told New Europe on 27 April that the Hungarian decision reflects both political and economic pragmatism. “The case for either pipeline is weak in the face of prospects for European Shale Gas production and the expected growth in global LNG trade. There is therefore zero economic case for two pipelines,” Weafer said.
The Troika Dialogue chief strategist noted that Russian Prime Minister and president-elect Vladimir Putin has made it a key strategic priority to either acquire a significant ownership stake in the Ukrainian pipeline transiting Russian gas supplies to Europe and then to boost its capacity, or to build South Stream. “As Kiev seems unwilling to budge on the ownership issue Putin is pushing ahead with South Stream and securing co-operation with countries such as Hungary as part of political and economic package deals,” Weafer said.
On 17 April, the Hungarian premier met with Gazprom CEO Alexei Miller in Budapest to discuss South Stream, which according to Russian gas monopoly Gazprom “meets the strategic interests” of both countries. Russia is a relatively good position to agree those deals because the country is financially in good shape while Europe is financially weak and lacking political leadership, Weafer said. “There is now very little support or even interest in Nabucco in Brussels. Nabucco is a wounded animal and Putin is pushing in for the kill,” he concluded.
KGeropoulos@NEurope.eu
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