05 March 2010, 14:18 Business

Turkish gas curtsy

Turkish Parliament approves Nabucco

Alexey Topalov Turkey approved Nabucco. Support for the European gas pipeline project as opposed to South Stream is a political nod towards Europe. However, experts say that Turkey is quite capable of allowing both Nabucco and South Stream to pass through its territory simultaneously

The Turkish parliament approved a bill on the construction of the Nabucco gas pipeline. According to ITAR-TASS , the decision made on Thursday “contains the main provisions necessary for the practical implementation of the project.” The head of the Turkish Ministry of Energy, Taner Yildiz, said that Nabucco will bring great benefits to the republic: Turkey also intends to reserve up to 15% of the gas volumes passing through the pipeline for its needs.

Nabucco's capacity should be 32 billion cubic meters per year, Turkey claims 4.8 billion cubic meters.

“Turkey has been running short of gas lately,” explains Finam Investment Company analyst Alexander Eremin . “The country needs more “blue fuel” to provide raw materials for its power plants, some of which currently run on fuel oil.”

(none) South Stream is a gas pipeline project that will run along the bottom of the Black Sea from Novorossiysk to the Bulgarian port of Varna. It will then be divided into two branches that will pass through the Balkan Peninsula to Italy and Austria. The project is being implemented on a parity basis by Gazprom and the Italian Eni. Construction of the pipeline should begin before the end of 2010. The project should come into operation no later than 2015. South Stream is designed to reduce the dependence of suppliers and buyers on transit countries, primarily Ukraine. The pipeline's throughput capacity should be 63 billion cubic meters of gas per year. The total investment in the project is estimated at 8.6 billion euros. Agreements have been concluded with Italy, Turkey, Greece, Bulgaria, Hungary and Croatia. Only Austria remains, with which negotiations are currently underway.

The use of gas would be more profitable for Turkey, since gas is cheaper. In addition, according to Yildiz, Turkey plans to levy duties to offset the costs of transporting gas through its territory. True, it is not entirely clear what we are talking about here, since if Yildiz spoke about the technical maintenance of the branch, then for this purpose part of the passing gas is usually taken away - these volumes are called technical gas, and if we are talking about money, then this is the usual transit fee . Eremin believes that the Turkish minister had in mind the second option.

Turkey, along with Hungary and Bulgaria, also participating in Nabucco, simultaneously supports the Russian gas pipeline project South Stream. There are different opinions regarding these two projects: Europe has repeatedly stated that it does not consider them to be competing; some market experts share the same point of view. The main argument is the increasing gas consumption in EU countries - each gas pipeline will take its share of the market.

However, other experts say that two pipes supplying gas in one direction are not needed and only the gas pipeline that is built first will actually work: the second will automatically no longer be needed.

While South Stream is ahead - a feasibility study for this project should be developed by the end of this year, while with Nabucco there is no certainty - a resource base for this pipe has not been found.

Nabucco The Nabucco gas pipeline is intended to supply gas to European countries from the Caspian region, as well as, possibly, Iran and Iraq. Participating in the project with equal shares of 16.67% are the Austrian OMV Gas & Power GmbH, the Hungarian MOL, the Bulgarian Bulgargaz, the Romanian Transgaz, the Turkish Botas and the German RWE Supply & Trading GmbH. OMV and RWE established the Caspian Energy Company (CEC) in London in December 2008, which will study the possibilities of transporting gas from the Caspian region to Europe. The planned length of the pipe is more than 3.3 thousand km. The throughput capacity should be 31 billion cubic meters per year. Construction work is planned to be completed by 2013. The estimated investment in the project is 7.3 billion euros, but recently there has been talk about expanding the pipeline, which could lead to an increase in the cost of the project to more than 20 billion euros. The main problem of Nabucco is the lack of a resource base. The participating countries have not yet been able to reach an agreement with any of the serious suppliers (mainly Iran and Turkmenistan were considered).

Nevertheless, South Stream participants are not giving up on Nabucco. With Turkey, everything is simple: according to Alexander Eremin, it supports Nabucco for political rather than economic reasons. “Turkey has long wanted to join the European Union , so the approval of Nabucco is a nod to Europe,” explains the analyst. However, Turkey can actually pass both pipes through its territory - this is beneficial for it, since the more gas pipelines, the more significant Turkey’s role as a gas transport hub. But Hungary and Bulgaria will not be able to handle two projects at once. “These countries can support both Nabucco and South Stream at the same time, but only for political reasons,” says Dmitry Ugolkov, deputy general director of CIG - Broker . “And when the time comes to choose, they will most likely lean toward a project that guarantees supplies, and large volumes at that.” That is, to South Stream.