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11 Mar, 2010 07:51

Eni chief calls for South Stream and Nabucco to link up

South Stream and Nabucco, the two major southern European pipeline projects, linking the Caspian region with Europe, should join forces according to Paolo Scaroni, head of Italian energy company, Eni.

South Stream aims to supply Russian gas to Europe, while Nabucco would secure energy for Europe bypassing Russia, but the Eni chief, a major partner for Gazprom in South Stream, says the merger of some parts of the two routes would cut the cost of both projects.

“If all the parties decide to merge the two pipelines in part of their routes, we’ll be able to cut investment, operational costs and increase income. The two will join the biggest European gas consumers and suppliers.”

Scaroni also added that at a time when demand for gas is growing, Europe should increase investments in infrastructures to ensure gas supplies from "new sources" – like Turkmenistan, Kazakhstan and Africa. By 2020, he said, Europe may need to import about 180 billion cubic meters every year, and guaranteed that all necessary steps to provide for regular supply would be taken.

“Establishing cooperation, developing the existing sources of supply and strengtheninig both the existing and new corridors, we’ll do everything necessary to provide for sufficient, available and safe gas supplies to Europe.”

Though South Stream and Nabucco pipelines are often viewed as rival gas projects, Gunther Oettinger, EU Energy Commissioner, said last week that the European Commission didn’t think so and thought of both of them as “superb”.

Analysts welcomed the idea, but Vitaly Yermakov, head of research at CERA, said Gazprom had no alternative, but to focus on improving transit through Ukraine.

“It might be actually a good idea while shifting ground pretty much on every front, Gazprom will have to think very hard about how to treat the proposal by Ukraine to create a gas consortium which will consist of European side, Russian side and Ukrainian side and theoretically this actually might be first choice option for everyone and cheapest and most attractive economic option. Then the idea of actually making Nabuco and South Stream a single big gas bridge concept piece is actually a new approach and it should be evaluated against competitive project.”