Iraq offers half gas needed for Nabucco

By Delphine Strauss and Ed Crooks

Iraq has offered to supply enough gas to fill half the capacity of the proposed Nabucco pipeline, the prime minister said, giving the project a boost even as heads of government met to sign a historic agreement approving the plan.

The offer from the Iraqi government to supply 15bn cubic metres a year of gas by 2015 helps address the greatest obstacle to the 3,300km pipeline from eastern Turkey to Austria: the prospect of there not being enough gas to fill it.

José Manuel Barroso, pre sident of the European Commission, said the signing of the Nabucco agreement in Ankara by the leaders of five countries on the pipeline’s route – Austria, Bulgaria, Hungary, Roman ia and Turkey – could “open the door to a new era in the relationship between the European Union and Tur key, and indeed beyond”.

Dick Lugar, the most senior Republican in the US senate, said the agreement was “a signal to the rest of the world that partner governments will not acquiesce to manipulation of energy supplies for political ends”.

Nabucco is intended to provide an alternative to Russian supplies, which have caused growing concern following the disruption caused by disputes be tween Russia and Ukraine.

The hope is that the inter-governmental agreement will convince gas-producing countries that the project – scheduled to start in 2014 – is closer to becoming reality than rival European or Russian-sponsored schemes, and persuade them to commit the volumes needed for commercial viability.

The only supplier that will definitely be ready for the first phase of the project is Azerbaijan, but it is juggling Nabucco’s de mands against those of Russia.

Richard Morningstar, US energy envoy, described Azeri gas as a “necessary condition” but not sufficient for the €8bn ($11bn, £7bn) Nabucco project.

If Iraq is able to achieve its ambition of supplying an annual 15bn cu m a year, it will fill almost half the pipeline’s 31bn cu m capacity.

International oil companies are interested in investing in the country to develop its resources, including gas.

The Kurdistan region in the north of Iraq has also attracted a planned investment by a consortium of companies including OMV of Austria and Mol of Hungary, which are both members of the Nabucco group.

Nabucco executives say significant quantities of gas could be available from those Kurdish fields as soon as next year.

Recep Tayyip Erdogan, the Turkish prime minister, also reiterated his desire for Iran to be a supplier “when conditions allow”, despite US opposition.

Andris Piebalgs, EU energy commissioner, said the EU’s focus now would be on encouraging Turkmenistan to participate. Stefan Judisch of Germany’s RWE, the energy group that is a member of the Nabucco consortium, said Turkmenistan would be able to supply an annual 10bn cu m in the pipeline’s first phase, but would first have to find a way through disputes over the Caspian Sea.

Gurbanguly Berdymukhammedov, president of Turkmenistan, said last week that participation in the project would help his country – which is locked in a dispute with Russia over gas supplies – to diversify its export routes.

Mr Piebalgs was optimistic about the consortium’s prospects of finding financing, saying: “If they have the gas, money will follow.”

However, there are fears that some companies in the consortium could struggle to finance their share of the pipeline – forcing them to accept a smaller share of its capacity.