icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm
13 Jan, 2010 10:35

South Stream and Nabucco jockey as Turkish PM visits Moscow

The Moscow visit by Turkey's prime minister, Recep Erdogan, is expected to see more discussions about gas transport from the Caspian to Europe, with the South Stream and Nabucco projects jockeying to be completed first.

Two projects are competing to be the first to provide access for Caspian region gas producers to the European market. Russia is forging ahead with its South Stream project, while the competing Nabucco pipeline project is also looking to move beyond the planning stages.

Nabucco has been declared a priority project by the EU, but it still does not have the consent of all the countries involved and is a step behind South Stream. CERA analyst, Vitaly Ermakov, says completion dates are likely to decide the outcome between the two rival gas transport routes.

“In reality it's much more complex. It involves section viability of the companies involved in the 2 projects to build it, to make sure it happens. Whichever pipeline will be built first will win the race, because it's going to effect the end market in a big way.”

The main suppliers of gas in Central Asia, Azerbaijan and Turkmenistan, have still not agreed to provide gas for Nabucco. Turkmenistan is looking East, to China, as a fast growing energy market, and Azerbaijan is taking its time to win the best deal possible.

However, the costs of both projects are immense, with the €25 billion South Stream Gazprom's most costly undertaking. The Nabucco project, estimated at about €10 billion, may be a better economic choice according to IFC Metropol senior analyst, Aleksandr Nazarov.

“The sources are probably the same. The Central Asian gas, that is Turkmenian gas, primarily, and, partially, Iran, and gas from Azerbaijan. This one will be cheaper and probably more cost efficient than South Stream.”

The 3,300 kilometer long Nabucco pipeline will run from Erzurum in Turkey via Bulgaria, Romania, and Hungary to a major natural gas hub in Austria. Bulgaria, Turkey and Hungary, are also involved in South Stream. But with demand in Europe for gas already falling, the party that builds their pipeline first is likely to make their competitor’s obsolete and will win the market