Nabucco and safety of Georgia

19.08.201011.07.2013

Giorgi Kharshiladze University of Rome “Tor Vergata”, Faculty of Economics

Nabucco is the new gas bridge from Asia to Europe and the flagship project in the Southern Corridor.

It will be a pipeline to connect the world’s richest gas regions – the Caspian region, Middle East and Egypt – to the European consumer markets.
The name of the pipeline, Nabucco, alludes to the Verdi opera, whose theme is freedom from bondage, reputedly a reference to Russia’s domination over Central Asian gas supplies.
The pipeline will link the Eastern border of Turkey, to Baumgarten in Austria – one of the most important gas turntables in Central Europe – via Bulgaria, Romania and Hungary. When completed the 3,300 km pipeline’s annual capacity will be 31 bcm. The construction of the pipeline is supported by the 2009 Intergovernmental Agreement signed in Ankara in July 2009, which harmonizes the legal framework and grants stable and equal transport conditions for all partners and customers.
It is widely acknowledged that Central and Western Europe will face a considerable shortfall in its energy supply over the next two decades, with gas prices expected to increase as domestic production declines. Consequently, it is crucial that new infrastructure be established to meet further demand and ensure both security of supply and supply diversification.
The main pipeline will be built in one phase from Ankara to Baumgarten. Construction will start in 2011.
The significance of the Nabucco pipeline for European gas supply cannot be stressed enough. It will serve as the final link to the Caspian corridor by connecting Turkey to Western Europe, securing access to over 60 000 bcm Caspian and Middle-Eastern gas reserves. This amount far exceeds the EU’s indigenous reserves, and is only somewhat comparable to Russia’s reserves. The Nabucco pipeline will therefore significantly increase diversity and security of supply for Europe in the longer term.
Despite repeated efforts by European policymakers in the last few years to further deregulate and increase competition in energy markets, significant concentration remains in the EU gas markets. Infrastructure developments targeting new upstream sources such as Nabucco are therefore key to opening the gas markets up and bringing down and stabilising prices.
Nabucco is the largest European infrastructure project in terms of countries involved. This will support European Integration. This will help boost the European economy.
Europe, in recent years has been wracked by Gazprom’s moves to shut off gas imports to Europe for one reason or another. Nabucco project has been delayed for several times. 2009 Nabucco was taken out from the list of projects which had to be financed by EU. One of main figures who is against the Nabucco project is Angela Merker, who does not want to put European money in this project, because she believes that authores of this project will not succeed to gather pertinent gas resources. After Russian-Ukrainian Gas dispute, when Europe was left without gas Nabucco became more active theme. Russia does not want to loose the status of main supplier of gas for Europe tries to block somehow Nabucco project, that’s why Russia draw out new South Stream gas pipeline project.
The Intergovernmental Agreement, which was signed in 2009, is valid until 2059. It is significant in the development of Nabucco as it guarantees full political support from the transit countries; defines a unique legal framework; and outlines the transport tariff methodology, – thus ensuring the stability of the project in the longer term.
A Nabucco spokesman has emailed this comment to Eastern approaches:
“The Nabucco project is currently the only ground breaking economic initiative for the greater diversity of gas sources and transportation routes and enhanced competition in Europe. No other project in the Southern Corridor can claim to compete on this basis nor is as advanced and well positioned as Nabucco.
With an Intergovernmental agreement already in place, Nabucco is the only project that has a firm legal basis. Nabucco started the ESIA process in April and all national Nabucco companies have been set up and are now operational. Nabucco is currently in negotiations with major banks such as EIB, EBRD and IFC. All six Nabucco shareholders are committed to completing and promoting the project. Nabucco is on track and will be completed.”
Nabucco doesn’t have an oil company champion behind it, rather it is backed by European governments and the U.S.-all of which desire to reduce the influence of Russia on Europe’s energy supply.
Russia currently promotes South Stream in Europe as a political and lobbying project: First, to discourage private-sector investment in Nabucco (or achieve a comparable result by making South Stream eligible for EU funding). Second, to threaten Ukraine with shifting Russian gas transit from Ukrainian pipelines into South Stream, unless Kyiv agrees to share control of its transit system with Gazprom. Third, by blocking Nabucco, to preclude Azerbaijan’s free access to European gas markets, compelling it to export its gas through Russia-approved pipelines. And fourth, to cut off Turkmenistan from accessing Nabucco and other planned pipelines in the EU’s Southern Corridor, thus regaining control over a portion of Turkmen gas production.
To create an appearance of forward movement, Moscow has multiplied invitations into the South Stream project, with corresponding gas supply offers, to countries and companies in recent periods. In the process it constantly reconfigures the project’s geography -thus further sapping its credibility- while playing off the transit countries against each other. The Russian government and Gazprom are currently in talks with almost a dozen would-be partners in South Stream, without identifying any source of gas for the project.
Gazprom is attempting to block offers and solutions by attempting to disrupt the Nabucco consortium. The proposal for RWE to join South Stream is the latest move in this regard. The Nabucco consortium is headed for the investment decision, to be announced before the end of the current year. As that date draws nearer, Moscow can be expected to obstruct it by lobbying for South Stream in Europe.
On July 30 in Berlin, Gazprom’s Vice-President, Aleksandr Medvedev, deprecated the EU-backed Nabucco project and claimed that Russia would imminently proceed with the rival South Stream. “There is complete certainty about South Stream. We have enough gas to supply 63 billion cubic meters (bcm) every year, from 2015 onward, for the next 30 or 40 years,” Medvedev claimed. Along with the lure to Europeans came the threat to bypass an “unreliable” Ukraine: “Gazprom has good and reliable partners along the whole route of South Stream.” Moreover, he asserted, “we have unique technical experience for laying gas pipelines on the seabed.” Medvedev was speaking at a news conference presenting the new CEO of Gazprom Germania, Vladimir Kotenev, the former Russian Ambassador to Germany. Moscow works through the Italian and other friendly West European governments in the EU to obtain TEN status (Trans-European Networks) for the South Stream project.
However, with no identified gas volumes in Russia or elsewhere to supply its declared annual capacity of 63 billion cubic meters (bcm), and no financing anywhere for its declared cost of $25 billion to $30 billion, South Stream cannot be taken seriously as a gas supply and transportation project, nor as a bankable project. Its initial planning assumption (2006-2007) had been the Russian monopsony on Turkmen gas, but Russia has clearly lost that advantage.
The German government has not moved to support South Stream politically or to encourage financing for the project, as Moscow was hoping Berlin would do. On the contrary, the Berlin government across party lines expressed concern when Gazprom suggested to the German RWE company (a Nabucco consortium partner) to join South Stream. The German government even took this concern to the recent Russo-German summit, which was markedly cooler overall than the previous ones (EDM, July 13, 14). Shortly afterward, on an official visit to Kazakhstan, German Chancellor, Angela Merkel, raised with President Nursultan Nazarbayev the possibility of Kazakh gas supplies for Nabucco
“You could say 2010 is indeed the Nabucco year,” says Mr. Mitschek. (nabucco Director) “A lot now depends on a successful open season this year,” the open season being the tendering process during which gas traders can buy transport capacity in the planned pipeline.
Georgia lays its great hopes on the accomplishment of “Nabucco” project. Tbilisi states that Georgia will receive about a billion cubic meters of gas a year from a new gas pipeline on account of transit. However, as Georgian politicians and experts state for Georgia the main fact is that together with “Nabucco” project accomplishment Europe will be really interested in the security of Georgia as a vitally important transport corridor. And this means that the USA, NATO and EU will provide Georgia with serious support in security strengthening and will contribute into the intensification of Euro-Atlantic integration of the country. Georgian officials have been complaining for a long time that their country has become a victim of pipeline politics. President Mikheil Saakashvili reportedly claimed that the very fact that Georgia is already home to an oil line, the Baku-Tbilisi-Ceyhan (BTC) pipeline, designed with the precise aim of circumventing Russia in mind, was a major reason for the Russian assault.
What regards the possibility that NATO will defend the safety of gas pipeline about this was announced on the Baku meeting. NATO is ready to guarantee Nabucco pipeline safety. According to the the chief of NATO economic safety Michael Gaul alliance does not reject military expansion in the sake of prevention of energy provision even beyond the competences of the NATO zone.
The Western powers provide large quantities of civilian and military aid to pliant regimes such as Georgia and Azerbaijan, routinely turning a blind eye to human rights abuses and rigged elections there. Russia, in turn, uses its military and political influence to advance its interests. In this conditions policy of NATO to defend energy route with all means is very important for Georgia, especially when the main ideologist of foreign affairs of Kremlin, professor of Moscow state University, philosopher Alexander Dugin appeals Russian government to declare war on the territories of that states which are seeking to achieve energy independence from Russia. Nabuuco project must collapse for any price, – declares Dugin, – because it is related to the geopolitics of gas, and if for this it will be necessary to start military conflict we have to do this. In geopolitics all methods are good.
All Georgia’s natural gas requirements will be covered by the fuel it is to receive for its role in the Nabucco gas pipeline project, said the Georgian energy minister.
“When the Nabucco project comes on stream, Georgia will receive gas according to the 5 + 5 formula. This means Georgia will receive 5% of natural gas transported via the pipeline free of charge and another 5% at a concessional price,” Alexander Khetaguri said.
Billion and six million cub.m is the amount of gas which consumes nowadays Georgia. For 2014 Georgia gas consumption will increase, cause our economics will be more developed. I am sure that the volume of gas which will leave us Nabucco project will cover most part of Georgia consumption. – declared Alexander Xetaguri.
However risks, referred to the project accomplishment, reminded about them already on the 2009, 13th of July – in the day of agreement signing. This day Dmitry Medvedev paid an unexpected visit to Tskhinvali – the capital of separatist region, the independence of which Russia acknowledged after the war in August. The President of Georgia stated that day that Russian President in purpose confined his visit to the signing of “Nabucco” agreement. Experts in Georgia consider that this way Russian leader demonstrated the vulnerability of projects with Georgian participation. The prospect to lose the monopoly on sales to Europe of Central Asian gas for Russia is very painful and Moscow is able to make radical moves to prevent the project.
In this scenario in my point of view Georgia’s economic and political safety will be more satisfied while involved in such huge project as Nabucco. Hopefully, foreign invasions will not take place anymore on our territory as international gas pipeline will add more value to our country’s political stabilization and we will lead normal and peaceful life.
In the end I would like to give Eurocommission president’s Manuel Baruso’s words on the signing ceremony in Ankara who called the Nabucco project certainly the European one which will provide energy safety for Turkey, south-east and central Europe countries.

www.foreignpress.ge
www.geotimes.ge
www.gbw.ge
http://banksandfinance.ge
www.experti.ge
http://inopressa.ru
www.finansy.ru
www.jamestown.org
http://eu.wallstreetjournal.com
www.tavisupleba.org
www.wsws.org
www.economist.com
www.ft.com
www.forbes.com
www.euractiv.com
www.nabuccopipeline.com
www.eurodialogue.com
http://oilprice.com

e-mail: giorgikh-87@yahoo.com
T: 61 29 27, 899 53 16 02
Nabucco is the new gas bridge from Asia to Europe and the flagship project in the Southern Corridor. It will be a pipeline to connect the world’s richest gas regions – the Caspian region, Middle East and Egypt – to the European consumer markets.
The name of the pipeline, Nabucco, alludes to the Verdi opera, whose theme is freedom from bondage, reputedly a reference to Russia’s domination over Central Asian gas supplies.
The pipeline will link the Eastern border of Turkey, to Baumgarten in Austria – one of the most important gas turntables in Central Europe – via Bulgaria, Romania and Hungary. When completed the 3,300 km pipeline’s annual capacity will be 31 bcm. The construction of the pipeline is supported by the 2009 Intergovernmental Agreement signed in Ankara in July 2009, which harmonizes the legal framework and grants stable and equal transport conditions for all partners and customers.
It is widely acknowledged that Central and Western Europe will face a considerable shortfall in its energy supply over the next two decades, with gas prices expected to increase as domestic production declines. Consequently, it is crucial that new infrastructure be established to meet further demand and ensure both security of supply and supply diversification.
The main pipeline will be built in one phase from Ankara to Baumgarten. Construction will start in 2011.
The significance of the Nabucco pipeline for European gas supply cannot be stressed enough. It will serve as the final link to the Caspian corridor by connecting Turkey to Western Europe, securing access to over 60 000 bcm Caspian and Middle-Eastern gas reserves. This amount far exceeds the EU’s indigenous reserves, and is only somewhat comparable to Russia’s reserves. The Nabucco pipeline will therefore significantly increase diversity and security of supply for Europe in the longer term.
Despite repeated efforts by European policymakers in the last few years to further deregulate and increase competition in energy markets, significant concentration remains in the EU gas markets. Infrastructure developments targeting new upstream sources such as Nabucco are therefore key to opening the gas markets up and bringing down and stabilising prices.
Nabucco is the largest European infrastructure project in terms of countries involved. This will support European Integration. This will help boost the European economy.
Europe, in recent years has been wracked by Gazprom’s moves to shut off gas imports to Europe for one reason or another. Nabucco project has been delayed for several times. 2009 Nabucco was taken out from the list of projects which had to be financed by EU. One of main figures who is against the Nabucco project is Angela Merker, who does not want to put European money in this project, because she believes that authores of this project will not succeed to gather pertinent gas resources. After Russian-Ukrainian Gas dispute, when Europe was left without gas Nabucco became more active theme. Russia does not want to loose the status of main supplier of gas for Europe tries to block somehow Nabucco project, that’s why Russia draw out new South Stream gas pipeline project.
The Intergovernmental Agreement, which was signed in 2009, is valid until 2059. It is significant in the development of Nabucco as it guarantees full political support from the transit countries; defines a unique legal framework; and outlines the transport tariff methodology, – thus ensuring the stability of the project in the longer term.
A Nabucco spokesman has emailed this comment to Eastern approaches:
“The Nabucco project is currently the only ground breaking economic initiative for the greater diversity of gas sources and transportation routes and enhanced competition in Europe. No other project in the Southern Corridor can claim to compete on this basis nor is as advanced and well positioned as Nabucco.
With an Intergovernmental agreement already in place, Nabucco is the only project that has a firm legal basis. Nabucco started the ESIA process in April and all national Nabucco companies have been set up and are now operational. Nabucco is currently in negotiations with major banks such as EIB, EBRD and IFC. All six Nabucco shareholders are committed to completing and promoting the project. Nabucco is on track and will be completed.”
Nabucco doesn’t have an oil company champion behind it, rather it is backed by European governments and the U.S.-all of which desire to reduce the influence of Russia on Europe’s energy supply.
Russia currently promotes South Stream in Europe as a political and lobbying project: First, to discourage private-sector investment in Nabucco (or achieve a comparable result by making South Stream eligible for EU funding). Second, to threaten Ukraine with shifting Russian gas transit from Ukrainian pipelines into South Stream, unless Kyiv agrees to share control of its transit system with Gazprom. Third, by blocking Nabucco, to preclude Azerbaijan’s free access to European gas markets, compelling it to export its gas through Russia-approved pipelines. And fourth, to cut off Turkmenistan from accessing Nabucco and other planned pipelines in the EU’s Southern Corridor, thus regaining control over a portion of Turkmen gas production.
To create an appearance of forward movement, Moscow has multiplied invitations into the South Stream project, with corresponding gas supply offers, to countries and companies in recent periods. In the process it constantly reconfigures the project’s geography -thus further sapping its credibility- while playing off the transit countries against each other. The Russian government and Gazprom are currently in talks with almost a dozen would-be partners in South Stream, without identifying any source of gas for the project.
Gazprom is attempting to block offers and solutions by attempting to disrupt the Nabucco consortium. The proposal for RWE to join South Stream is the latest move in this regard. The Nabucco consortium is headed for the investment decision, to be announced before the end of the current year. As that date draws nearer, Moscow can be expected to obstruct it by lobbying for South Stream in Europe.
On July 30 in Berlin, Gazprom’s Vice-President, Aleksandr Medvedev, deprecated the EU-backed Nabucco project and claimed that Russia would imminently proceed with the rival South Stream. “There is complete certainty about South Stream. We have enough gas to supply 63 billion cubic meters (bcm) every year, from 2015 onward, for the next 30 or 40 years,” Medvedev claimed. Along with the lure to Europeans came the threat to bypass an “unreliable” Ukraine: “Gazprom has good and reliable partners along the whole route of South Stream.” Moreover, he asserted, “we have unique technical experience for laying gas pipelines on the seabed.” Medvedev was speaking at a news conference presenting the new CEO of Gazprom Germania, Vladimir Kotenev, the former Russian Ambassador to Germany. Moscow works through the Italian and other friendly West European governments in the EU to obtain TEN status (Trans-European Networks) for the South Stream project.
However, with no identified gas volumes in Russia or elsewhere to supply its declared annual capacity of 63 billion cubic meters (bcm), and no financing anywhere for its declared cost of $25 billion to $30 billion, South Stream cannot be taken seriously as a gas supply and transportation project, nor as a bankable project. Its initial planning assumption (2006-2007) had been the Russian monopsony on Turkmen gas, but Russia has clearly lost that advantage.
The German government has not moved to support South Stream politically or to encourage financing for the project, as Moscow was hoping Berlin would do. On the contrary, the Berlin government across party lines expressed concern when Gazprom suggested to the German RWE company (a Nabucco consortium partner) to join South Stream. The German government even took this concern to the recent Russo-German summit, which was markedly cooler overall than the previous ones (EDM, July 13, 14). Shortly afterward, on an official visit to Kazakhstan, German Chancellor, Angela Merkel, raised with President Nursultan Nazarbayev the possibility of Kazakh gas supplies for Nabucco
“You could say 2010 is indeed the Nabucco year,” says Mr. Mitschek. (nabucco Director) “A lot now depends on a successful open season this year,” the open season being the tendering process during which gas traders can buy transport capacity in the planned pipeline.
Georgia lays its great hopes on the accomplishment of “Nabucco” project. Tbilisi states that Georgia will receive about a billion cubic meters of gas a year from a new gas pipeline on account of transit. However, as Georgian politicians and experts state for Georgia the main fact is that together with “Nabucco” project accomplishment Europe will be really interested in the security of Georgia as a vitally important transport corridor. And this means that the USA, NATO and EU will provide Georgia with serious support in security strengthening and will contribute into the intensification of Euro-Atlantic integration of the country. Georgian officials have been complaining for a long time that their country has become a victim of pipeline politics. President Mikheil Saakashvili reportedly claimed that the very fact that Georgia is already home to an oil line, the Baku-Tbilisi-Ceyhan (BTC) pipeline, designed with the precise aim of circumventing Russia in mind, was a major reason for the Russian assault.
What regards the possibility that NATO will defend the safety of gas pipeline about this was announced on the Baku meeting. NATO is ready to guarantee Nabucco pipeline safety. According to the the chief of NATO economic safety Michael Gaul alliance does not reject military expansion in the sake of prevention of energy provision even beyond the competences of the NATO zone.
The Western powers provide large quantities of civilian and military aid to pliant regimes such as Georgia and Azerbaijan, routinely turning a blind eye to human rights abuses and rigged elections there. Russia, in turn, uses its military and political influence to advance its interests. In this conditions policy of NATO to defend energy route with all means is very important for Georgia, especially when the main ideologist of foreign affairs of Kremlin, professor of Moscow state University, philosopher Alexander Dugin appeals Russian government to declare war on the territories of that states which are seeking to achieve energy independence from Russia. Nabuuco project must collapse for any price, – declares Dugin, – because it is related to the geopolitics of gas, and if for this it will be necessary to start military conflict we have to do this. In geopolitics all methods are good.
All Georgia’s natural gas requirements will be covered by the fuel it is to receive for its role in the Nabucco gas pipeline project, said the Georgian energy minister.
“When the Nabucco project comes on stream, Georgia will receive gas according to the 5 + 5 formula. This means Georgia will receive 5% of natural gas transported via the pipeline free of charge and another 5% at a concessional price,” Alexander Khetaguri said.
Billion and six million cub.m is the amount of gas which consumes nowadays Georgia. For 2014 Georgia gas consumption will increase, cause our economics will be more developed. I am sure that the volume of gas which will leave us Nabucco project will cover most part of Georgia consumption. – declared Alexander Xetaguri.
However risks, referred to the project accomplishment, reminded about them already on the 2009, 13th of July – in the day of agreement signing. This day Dmitry Medvedev paid an unexpected visit to Tskhinvali – the capital of separatist region, the independence of which Russia acknowledged after the war in August. The President of Georgia stated that day that Russian President in purpose confined his visit to the signing of “Nabucco” agreement. Experts in Georgia consider that this way Russian leader demonstrated the vulnerability of projects with Georgian participation. The prospect to lose the monopoly on sales to Europe of Central Asian gas for Russia is very painful and Moscow is able to make radical moves to prevent the project.
In this scenario in my point of view Georgia’s economic and political safety will be more satisfied while involved in such huge project as Nabucco. Hopefully, foreign invasions will not take place anymore on our territory as international gas pipeline will add more value to our country’s political stabilization and we will lead normal and peaceful life.
In the end I would like to give Eurocommission president’s Manuel Baruso’s words on the signing ceremony in Ankara who called the Nabucco project certainly the European one which will provide energy safety for Turkey, south-east and central Europe countries.

e-mail: giorgikh-87@yahoo.com
T: 61 29 27, 899 53 16 02