NABUCCO Why? - When? - Some Myths and Facts

Transcription

1 NABUCCO Why? - When? - Some Myths and Facts More than ever, Nabucco is needed for the following reasons: With the gas crisis in the winter of 2008 and 2009, European consumers have experienced personally why Europe needs diversified gas import routes and diversified gas sources, and why Europe needs these gas supply alternatives when and where required. Against the background of renewed threat of supply interruptions, Nabucco will offer of both access to new supply sources and a new gas import route for at least 150 million EU citizens Europe 1 is the largest interlinked demand market for gas in the world, consuming 526 billion cubic metres 2 (bcm) of gas per year, and offers significant opportunities to the Caspian countries and the Middle East not only as markets for their gas, but also in attracting further foreign investment and technical know-how to their countries all of which will translate into further economic, social and educational development. Europe s indigenous gas production (303 bcm in 2008) 3 will decrease significantly over the next decades (Norway, UK and Netherlands produce 247 bcm of gas, 82% of European production in 2008), at a time when gas demand is expected to increase, mainly due to rising demand from gas fired power stations. Thus, the Nabucco pipeline will offer an important infrastructure link between a region with high demand and dwindling resources Europe and a region with the world s largest combined gas reserves (some 84 trillion cm): the Caspian countries and the Middle East. Caspian countries such as Azerbaijan and Turkmenistan have repeatedly and clearly stated that they want to diversify their export routes and to sell gas to Europe (thus offering better security of demand and price). Turkey, as a Nabucco partner, will gain considerably from the pipeline, reinforcing its role as a major energy transit point. With new gas from producer countries and interconnectivity with the large European market, Turkey will see more liquidity in its market, and pricing for its consumers reflecting more its advantageous geographical position. The energy projects recently agreed between Russia and Turkey will reinforce Turkey s role as an energy bridge, and complement, rather than compete with Nabucco, which continues to make rapid progress towards its realisation. 1 Entire Europe excluding Turkey 2 CERA June CERA Base case 1

2 Milestones for Nabucco: The Southern Corridor Summit in Prague gave a clear signal of commitment to the expansion of energy partnerships between Europe, the Caspian and the Middle East, leading to secure and diversified sources of gas for the European and Turkish market. The signing of the Inter-Governmental Agreement ( IGA ) on the 13 th of July in Ankara represents a major step towards the realisation of the project, and has already increased market confidence both in Europe, Turkey and in potential gas supplier countries. The IGA is an international treaty between the governments of Turkey, Bulgaria, Romania, Hungary and Austria, jointly committing them to assist in the development of Nabucco. The IGA also establishes the basis for a consistent regulatory transit regime for the whole pipeline route that allows Nabucco to operate in each state on a one stop shop principle. The agreement will contribute to competition in the gas market, offering equal access for all shippers. The IGA provides the legal and regulatory certainty necessary for building and running of the pipeline an important requirement for the gas supply countries in the Caspian region and Middle East to begin to make long term gas supply commitments. The IGA is an important prerequisite for the Open Season process, involving binding capacity booking, likely to start at the end of European gas markets are ready for Nabucco: a preliminary market survey undertaken with gas buyers in the summer of 2008 revealed a strong level of interest. Non-binding indications from potential gas buyers far exceeded the planned maximum pipeline capacity of 31 bcm Detailed technical planning as well as social and environmental impact assessments are already underway. Financing discussions are well advanced, and Nabucco has received strong commitments from the EIB, EBRD and other multilateral and export credit agencies. The President of the European Investment Bank, Philippe Maystadt stated earlier this year their intention to fund approx. 25 percent of the Nabucco project. EBRD Director for Energy Business Riccardo Puliti said in June that the EBRD was ready to lead a group of banks to finance the project with some 1 billion. The Final investment decision is expected at the end of Gas is targeted to start flowing through Nabucco by 2014/15. By 2020 at the latest it is anticipated that the Nabucco pipeline - stretching from the Eastern border of Turkey to Austria and with access from there to the rest of Western Europe will be delivering 31 billion cubic metres of gas per year. 2

3 Myths and Facts 1. Russia has been successful in weakening Nabucco by reinforcing energy partnership with Turkey We welcome the recent announcement in Ankara regarding on South Stream:Europe needs new gas import infrastructure to meet the forecasted growth in both demand and gas imports in Europe in the long term. As we have repeatedly said, we do not see Nabucco as being in competition with South Stream in downstream markets. Nabucco offers a highly competitive build cost, and open and transparent access for shippers which will translate into cheaper gas transport, diversification of routes and gas supply, and thus greater energy security for Europe and Turkey. 2. Without gas from Iran, Nabucco will not have enough to fill it Iranian gas is not a prerequisite for Nabucco delivering significant volumes of gas to Germany and other European countries. Indeed, Iran is currently a net importer of gas, and the country needs substantial investment over a long period in order to alter this. This will not happen until the political environment changes. Instead Nabucco will be filled from gas from the following countries: Azerbaijan - publicly stated its willingness to supply gas to Europe and has dedicated for export 13 bcm/a of the gas volumes expected from the development of its Shah Deniz phase II gas field in the Caspian Sea. Turkmenistan - seeking to diversify its gas export markets. The President of Turkmenistan has repeatedly signalled his willingness to supply some 10 bcm/a for onward delivery to Europe. Political and industrial cooperation, such as that recently agreed with RWE through the signing of a framework agreement in April 2009, point to turning these intentions into concrete action. Iraq - has significant gas reserves, which alone could fill the entire capacity of the Nabucco pipeline, which are now being actively developed. In May 2009, the Nabucco consortium partners OMV and MOL have acquired a 10% share each Crescent Petroleum and DanaGas Khor Mor and Chemchemal gas fields in Northern Iraque. Public statements by the companies indicate that there is a potential gas production of upto 30 bcm/a from these fields from around Gas that is in excess of Iraq s national needs can be exported to Turkey and Europe, offering significant foreign currency earnings for the further redevelopment of the country and bringing Iraq, Turkey and Europe closer together economically and politically. These three countries alone hold more than enough gas potential to meet shippers demands and Nabucco s requirements for reaching a financial investment decision. Nabucco is being constructed in phases, allowing a gradual build up of supply from these suppliers. Phase 1 of Nabucco, targeted for completion in 2014, will have a capacity of 8 bcm/a. This will be expanded 3

4 through additional compressor stations to 16 bcm/a in 2017 and to 31 bcm/a in Nabucco will be a burden on the EU budget and thus the European taxpayer Nabucco is a privately financed project, and, by definition, the investment risk is taken by the shareholders of Nabucco. Investors are showing strong support for the project: among others the European Investment Bank, the European Bank for Reconstruction and Development, other multi-lateral organisations and export credit agencies. Most recently, the President of the EIB stated publicly the Bank s intention to earmark around 2.5 bn. for Nabucco. Commercial banks, even during the current financial crisis, are also indicating strong interest and support. All of these are in the form of fully repayable loans. Nabucco is benefiting in the short term from the 200 million offered under the EU Recovery Plan. This is beneficial as much for its political signal as for its relatively small contribution to the expected 8 billion (or less) costs of the project. Large infrastructure investments such as this project also create significant tax income, jobs and industrial development opportunities in all the countries along the Nabucco route, making a major contribution to public finances and the economy in general. 3. The Caspian countries are just dallying with Europe, and will stay with their traditional partners Both Azerbaijan and Turkmenistan have made it clear that they want, and intend, to supply gas to Europe in order to diversify their export routes west. The Turkmen President Gurbanguly Mukhamedov made the following statement on 11 th July : " Turkmenistan is committed to diversifying its energy output to world markets. The world community knows that an independent audit proved our huge gas reserves. We are ready to sell it on our border in all directions, including for Nabucco. President Aliyev of Azerbaijan underlined both in the Budapest and Prague summits that he is keen to diversify transit routes and customers for Azeri gas, and is impatient to see the Nabucco pipeline completed. The Azeri Minister of Industry and Energy, Natiq Aliyev, said at the signing ceremony for the Nabucco Inter-Governmental Agreement in Ankara: "I am sure that the project will be realized successfully. Azerbaijan is the corridor for this project. Realization of the Nabucco project will strengthen Azerbaijan's position in the world market. RWE has been very active in building close relationships in these countries and taking forward initiatives to bring these mutual benefits to all parties: 4

5 The long term cooperation agreement signed in April 2009 by RWE and the Turkmen government to work jointly on projects covering the development and production of natural gas resources in Turkmenistan, on securing long-term gas supplies for RWE from Turkmenistan and on further transfers of know-how. In connection with the long term cooperation agreement, RWE Dea in July 2009 was awarded a concession to explore and develop Licence Block 23 in the Caspian Sea in Turkmenistan. RWE Dea has also recently opened an office in the Azeri capital Baku. RWE s cooperation with Kazakhstan in the field of coal-gasification, which is aimed at investigating ways of commercialising Kazakhstan s vast coal resources through conversion into (synthetic) natural gas. 4. Europe should prioritise North Stream or South Stream rather than Nabucco It s not an either or question: In the light of decreasing gas reserves, Europe will have to go for more options. Thus, Nabucco is not a competitor to North Stream. But where Nabucco is different from either South Stream or North Stream is that it offers: cheaper gas to Europe and Turkey: South Stream envisages laying a sub sea pipeline under the full length of the (very deep) waters of the Black Sea. This is both technically challenging and extremely expensive. Gazprom itself estimates that South Stream could cost at least 24 billion, which is three times the cost of building Nabucco (estimated at 8 billion at most) this would be translated into higher transportation tariffs for South Stream than Nabucco thus making Nabucco significantly more competitive. Nabucco would ensure that the price of delivered gas in Europe is kept lower and thus cheaper for end users. Nabucco offers gas suppliers a more competitive transport route: since Nabucco s transportation costs would be lower than South Stream s, Nabucco can offer gas suppliers a more competitive and direct route to market for their gas. This will be an important consideration for gas suppliers in the Caspian region looking to export gas. In addition, Nabucco is an open one stop shop gas pipeline and offers gas suppliers a diversified route to market with no intermediaries. more diversification of both supply and transmission routes for Germany and a large part of Central and Eastern Europe, offering security and choice to around 150 million EU citizens who hitherto have been largely dependent on gas from one supply country. more flexibility: Nabucco s compressor technology allows the pipeline to operate in reverse flow, so that, in an emergency, gas can flow from Western Europe to South Eastern Europe and also even to Turkey. more competition: Nabucco is open to all gas suppliers and consumer countries, with 50% of the capacity being offered through an Open Season procedure. 5

6 more security of supply for Eastern Europe: apart from serving the countries already mentioned, Nabucco presents the possibility of improving security of supply, for example, for Poland s 38 million inhabitants, and thus perhaps mitigating Polish concerns about North Stream. RWE s Czech gas network can supply gas to Poland as well as to Germany. RWE s Transgas network in the Czech Republic will be connected to North Stream through the Opal pipeline and thus together with Nabucco, can provide diversified supply options for these countries. more security of supply in a crisis: customers in Germany and elsewhere in Europe will in future be secure in the knowledge that Nabucco can provide sustained long term supplies to them in the event of future disruptions. 6