Nabucco's CEO Analyzes Strategy

Reinhart Mitschek is Managing Director of the Nabucco consortium, which is promoting the construction of a 31 bcm/year capacity, 3,300km long gas pipeline to carry gas from the Caspian region and the Middle East to Eastern and Central Europe. He outlines the project’s prospects in an interview with Dr. Theodoros Tsakiris.

Q: What is the strategic rationale being served by the construction of the Nabucco pipeline project?

A: The demand for gas imports to Europe will increase considerably in the upcoming two decades because domestic production will decline. Sufficient gas reserves are available around Europe to meet this future increase in demand for European gas. The challenge, however, is how this gas can be best transported to consumers. At present, sizeable enough capacity does not exist for transporting these gas volumes to European gas markets. Additionally, the only region with rich gas reserves and which is not yet connected with the European markets via pipeline, is the Caspian region, the Middle East and Egypt. Nabucco is therefore the answer to the challenge outlined above and consequently will open up a new transportation route to Europe. It is also the most viable transportation route from the Caspian basin, both logistically and economically, making it more attractive than other alternatives being discussed. Nabucco will enable Europe and Turkey to diversify their energy sources and contribute considerably to gas supply for the next decades – all at affordable prices.

Q: How are your negotiations with [Azerbaijan’s] Socar progressing? How close is the conclusion of these negotiations? Is it a matter of weeks or months?

A: The joint declaration signed in Baku on 13 January between the EU and Azerbaijan serves to pave the way to the full implementation of Nabucco by providing a firm political basis for gas supply from Azerbaijan. On 16 February, a meeting between the Nabucco consortium and the national oil and gas company Socar took place in Baku to intensify the dialogue for the conclusion of gas supply contracts. These are expected to be finalized in the course of 2011.

Q: Would the 10 bcm/y of Shah Deniz Phase 2 gas suffice to make a 31 bcm/y project financially viable?

A: The 10 bcm/y from Shah Deniz 2 would be a start for Nabucco if [commitments for] a firm build up from other capacities is given.

To read the full interview, click here.