Preamble
Nabucco, short for Nabucodonosor, is an opera consisting of four acts by Giuseppe Verdi based on the biblical story and the play by Auguste Anicet-Bourgeois and Francis Cornu about the Babylonian King Nabucco. This biblical epic is about power, love and religion, certainly more than a mere historical drama. Human conflicts are expressed here in highly emotional music and leave an indelible mark which has resonated to the present day.
King Nabucco, who, having defeated the Jews and entered Jerusalem, as a result of the defiance of the High Priest Zaccaria, orders the destruction of the temple. Following the occurrence of some unusual events King Nabucco becomes a believer and the saviour of the Jews, rebuilds the temple and from then on is hailed as the King of the Kings by Zaccaria1. Therefore the name Nabucco itself stands for freedom and independence for the Jews.
Europe's Strategic Dependence on Natural Gas
Natural gas is the second largest source of energy being used in Europe. The main sources of supply being mostly from the North Sea (British, Dutch, Danish and Norwegian), Italian, Romanian and German fields, with ad¬ditional Liquefied Natural Gas (LNG) imported from Russian, North and West African and Latin American fields.
European gas consumption (the 27 European Union countries plus the Balkan States and Switzerland) has reached 502 bcm (billion cubic meters) as of 2005 with the imported amount being 290 bcm, of which 126 bcm came from Russia. Nearly 42% of consumption within the EU is covered by indigenous production. The imports coming from Russia, Norway, and Algeria and to a very small part from other sources amount to 58% in total2.
Forecast of European Gas Supply2

The growing demand is expected to increase considerably in the upcoming decades. This means that by the year 2030 dependency on outside natural gas sources will rise and the share of natural gas as a primary energy source will increase from 23% to 34% in the long run3.
EU27 Gas Import Dependency from Outside Europe3

On the contrary, production potential of European sources is expected to drop by about 30% as indigenous production all over Europe is decreasing very dramatically. Due to the depletion of gas reserves, even if consumption remained at the same level as in 2005, between 125-173 bcm/yr, external supplies will be necessary to compensate for the loss of production. Therefore it is a must that new sources have to be established for the European gas markets to meet the expected future gas demand4.
Liquefied Natural Gas (LNG) is another source for the supply of gas. But the process of liquefying natural gas is still expensive and most of the natural gas exporters and importers have to develop the infrastructure to make LNG shipments cost-effective. Therefore, in the short and middle term, European consumption of piped natural gas is likely to rise.
In the Middle East and the Gulf region, Iran and Qatar have around 40% of the world's proven non-associated gas reserves. Iraq is still uncertain concerning its reserves and the future of its gas sector - which is expected to be determined by political developments in the coming years - however, it is still a potential source with an unknown capacity for 2030. By 2030, a production capacity of 890 bcm/yr is expected in the Middle East and Gulf, leaving in excess of 520 bcm/yr ready to be exported5.
Supply sources are already available to meet this expected increase in the future European gas demand from neighbouring areas such as the Middle East, the Gulf and the Caspian regions. The big challenge, however, is to transport this gas to the consumers and at present the means for transporting these volumes of gas to the European markets is not sufficient.
Reserves, Main Suppliers and Export Potential around Europe (bcm/yr)4

Gas Pipelines of Europe
Currently, Russia, Norway, Algeria and Libya are supplying gas by pipeline to Europe. The existing capacity is 311 bcm/yr as of 2007. By 2030, if the pipelines that are under construction and planned materialise, the total capacity will be expected to reach nearly 450 bcm/yr6. The projected pipelines are as follows:
• Algeria-Spain, "Medgaz", 8-10 bcm, expected to be in operation by the end of 2008
• Algeria-Italy, "GALSI", 8-10 bcm, expected to be in operation by the end of 2011
• Caspian via Turkey-Greece-Italy, "TGI", 8-10 bcm, expected to be in operation by the end of 2011 (the Greece phase has already been inaugurated)
• Russia-Germany, "Nordstream" 2x27.5 bcm, expected to be in operation 2010-2013
• Norway-UK, "Langeled", 25 bcm, expected to be in operation by the end of 2007
• Caspian via Turkey, "Nabucco", 31 bcm, expected to be in operation 2013
The only region with rich gas reserves and yet not connected with the European markets via pipeline is the Caspian Region, the Middle East and Egypt.
Nabucco: a pipeline connecting sources via Turkey, Bulgaria, Romania and Hungary with Austria (Baumgarten) is found to be the answer to the above mentioned challenge. The pipeline, 3300 kilometres long and at plateau capacity, will carry 31 bcm/yr of natural gas. Nabucco is geo-politically important because it will bypass Russia. This new pipeline transferring the so mentioned gas reserves to Europe will play a crucial role in terms of diversification and the security of supply. The project, scheduled to be completed by 2013, has encountered problems with its financing and lack of political will in some member states7.
The Project is also supported by the European Union "INOGATE" programme which stands for Interstate Oil and Gas Transport to Europe. The INOGATE Programme aims to improve the security of Europe's energy supply by promoting regional integration of oil and gas pipeline systems and facilitating their transport both within the region and towards the export markets of Europe, while acting as a catalyst for attracting private investors and international financial institutions to these pipeline projects.
Nabucco Pipeline Project Route

The main question for Nabucco is the "origin/source of gas" to be transported. The main source in the Caspian region, gas from Turkmenistan, is already contracted to Russia until 2028 and unless new field developments are executed, there is no excess gas available for Nabucco. On the other hand, Russia signed a major deal on December 20th 2007 with Kazakhstan and Turkmenistan to build a new natural gas pipeline along the Caspian Sea, which strengthened Russia's monopoly on energy exports from this region. Gas from Azerbaijan and Egypt is not sufficient to fill the pipeline. The huge source of gas in Middle East Iran (Pars Fields) still needs to be developed in order to fill the pipeline, whereas Iraq is still an uncertain source concerning its reserves and the future of its gas sector. Nevertheless, sanctions on Iran by the USA, forces the EU to give this country the cold shoulder. Qatar gas in the Gulf region, is too far and the geography that the pipeline would have to transverse is politically complicated and problematic.
Before questioning the "fate" of the Nabucco Pipeline, for a rationalist approach, the short history of the Nabucco Project developments should be considered:
• The first talks about the project took place in February 2002 between OMV Gas (the shares in the Nabucco Project have been transferred in 2006 to OMV Gas International GmbH) and BOTAŞ-Turkey; then MOL-Hungary, TRANSGAZ-Romania and BULGARGAZ EAD-Bulgaria followed.
• In a meeting in June 2002 in Istanbul all five parties to the project signed a protocol on their intention to jointly construct a new gas pipeline connecting the significant Middle East, Egyptian and Caspian gas reserves with Austria through a new pipeline crossing Turkey, Bulgaria, Romania, and Hungary.
• In October 2002 a Cooperation Agreement was signed between Botas, Bulgargaz, MOL, Transgaz and OMV Gas in order to conduct a feasibility study for the construction of the new gas pipeline.
• In December 2003 a Grant Agreement was signed between OMV Gas, the other four partners as associated beneficiaries and the European Commission. With this Agreement the EC awarded a grant in the amount of 50% of the estimated total eligible costs of the study phase i.e. feasibility study including market analysis, technical, economic and financial studies
• By the end of 2004, the various study phases of the feasibility study finalised. In principle, results clearly indicated that the project is technically and economically feasible and financially bankable.
• Some synchronisation and adjustment work was carried out in the first half of 2005 and finally the Nabucco Partners decided to go ahead with the project and to enter into the Development Phase.
• The various study phases of the feasibility study were finalised in principle.
Heads of Terms (HoT) of Standard Transportation Agreement have been agreed upon between the Nabucco Partners.
• End of 2006 a short term adviser was ordered to elaborate the respective tender documents for the selection of a General Engineer for FEED (Front End Engineering Design).
• A major step within the progress of the project development was the finalisation of the Exemption documents, which were eventually sent to the European Commission as well as to the relevant Regulators on 5th October 2006.
On March 8th 2006 The EC issued a "Green Paper" spelling out its objectives to achieve "sustainable, competitive and secure" energy supplies for Europe, the key aspect being to build a common external energy policy to coordinate relations with external suppliers such as Russia and OPEC countries. On January 10th 2007, the Commission adopted a Communication on a new energy policy for Europe, which states that "energy must become a central part of all external EU relations" .
As well as these developments on the Nabucco Project, in order not to loose control of energy supply and power in relation to either the CIS or EU countries, President Vladimir Putin of Russia started taking new actions and making interferences. The news below, published in the international press enlightens and reveals a big question mark about the future of the Nabucco project.
• Bulgaria rejects Gazprom's new offer, By Matthew Brunwasser, January 15th 2006 Sofia: "Bulgaria has officially refused Gazprom's attempt to renegotiate the fees it pays for gas that moves through Bulgarian territory, setting off fears of a new gas dispute or economic crisis in this country, which is heavily dependent on Russian energy resources".
• Gazprom's grip on Western Europe tightens with pipelines to Hungary, By Judy Dempsey, July 13th 2006 Berlin: "Russia and Hungary have joined forces to build new natural gas pipelines and underground gas storage facilities in the heart of Central Europe. The pipes would allow Russia to weaken its dependency on Ukraine as a transit country for its gas exports and could undermine the European Union's plans to build a different pipeline that is supposed to reduce Europe's own dependency on Russian gas".

• EU pipeline project loses momentum, By Judy Dempsey, June 26th 2007, Berlin: "The consortium attempting to build a natural gas pipeline that would reduce the European Union's dependence on Russian natural gas has failed to agree on financing or finding another partner to make the project viable. When President Vladimir Putin of Russia was on a state visit to Austria last month, Gazprom and OMV agreed to a large natural gas storage facility that would turn Austria into a hub and a transit country for Russian gas. Gazprom also agreed to increase its deliveries of natural gas to Austria, from 6.8 billion cubic meters in 2007 to 9 billion cubic meters by 2009. Russia already delivers 70 percent of Austria's natural gas needs."
• Russian plans increase pressure for U.S.-backed pipeline, By James G. Neuger Bloomberg News, July 2nd 2007, OHRID, Macedonia: "Plans for a natural gas pipeline across the Black Sea by Gazprom of Russia and Eni of Italy were adding to pressure on a U.S.-backed group to complete a rival project in southern Europe, an official with the U.S. State Department said. Gazprom, the Russian gas monopoly and Eni would compete against a planned Turkey-to-Austria pipeline backed by the U.S and EU as a way of pumping central Asian gas to Europe without going through Russia. The U.S. deputy assistant secretary of state, Matthew Bryza, said the announcement last month of the Russian-Italian venture, could inspire countries along the southern corridor to move ahead quickly to build the pipeline. Gazprom and Eni plan to spend €10 billion to build a 900 kilometres link under the Black Sea that would compete against the €5 billion project, known as Nabucco, favoured by Washington."
• OMV of Austria aims to become a hub for natural gas, By Judy Dempsey, July 8th 2007 Vienna: "As big European energy companies vie with each other to win production rights in the giant gas fields of Russia, an Austrian company is pursuing a different strategy by developing the biggest continental hub for natural gas with Russia participating in the project and supplying much of the fuel."
• Nabucco Gas Pipeline Project Is Back on Track, By Vladimir Socor, September 19th 2007; "All players involved in the Nabucco gas pipeline project got their act together at a conference on September 14-15 in Budapest. The European Union demonstrated for the first time a hands-on commitment to the project. The Hungarian government announced its re-commitment after a year's wavering. Azerbaijan's Energy and Industry Minister, Natig Aliyev, confirmed his country's willingness to help kick-start Nabucco's first phase from the Shah-Deniz gas field's first phase of production, pending solutions to Central Asian gas supplies for the pipeline's second phase. The European Union's Energy Commissioner, Andris Piebalgs, termed Nabucco "an embodiment of the existence of a common European energy policy" in his speech at the conference. He announced the appointment of Jozias van Aartsen, former minister of foreign affairs of the Netherlands, as EU coordinator of the Nabucco project, with a four-year mandate. The EU had included Nabucco among the four top-priority energy projects already last year, but the Commission took a long time before filling the coordinators' posts. There is some good news for the project's consortium. The World Bank warned that the project needed additional backing, and now Germany's RWE and Gaz de France have declared their interest in joining in. The EU has also begun talks toward securing a supply of Turkmenistan's gas for Nabucco. (Russia's Gazprom currently dominates the market for Turkmen gas, which it gets at below-market prices. So the Turkmen's have an interest in finding other partners.) In addition, a new Iran-Turkey energy deal signed in July may provide a vital overland transit linking the Turkmen gas to Nabucco. Even so, Nabucco's future still looks rocky. The project's backers have yet to secure any firm gas commitments to the pipeline. And although RWE and Gaz de France might want to join, the EU's unbundling policy makes it harder for Europe's biggest energy companies to commit. However Nabucco is increasingly under pressure from several Russian led energy deals".
• Letter from Europe guessing game focuses on European energy, By Judy Dempsey September 20th 2007, Budapest: "A new Great Game is unfolding in Central Asia, where the British and Russian empires contended for supremacy over this vast and rich region. The European plan seems simple. Europe needs Iranian natural gas for the Nabucco pipeline, the European Union's most ambitious infrastructure project. The European Commission, the executive arm of the European Union, is pulling out all the stops. Last week it appointed Jozias van Aartsen, a former Dutch foreign minister, to oversee a project that has been plagued by delays, poor organization and conflicting interests among the five shareholders. They are OMV of Austria, MOL of Hungary, Botas of Turkey, Bulgargaz of Bulgaria and Transgaz of Romania. It also has repercussions for trans-Atlantic relations as U.S. diplomats quietly try to keep Iran from feeding gas into Nabucco".
• Gazprom deal with Eni drives new wedge into hopes for EU energy unity, By Judy Dempsey, November 22nd 2007 Berlin: "Gazprom, strengthened its grip on the European natural gas market after signing a contract with Eni, the Italian energy group. This would further weaken the European Union's chances of establishing a united energy policy. Under the €10 billion deal, Eni and Gazprom established a company to build the South Stream pipeline, an underwater project linking Russia to Europe via the Black Sea."
• Russia signs Central Asian pipeline deal, By Judy Dempsey, December 20th 2007, Berlin: "Desperate to meet growing domestic and European demand, Russia signed a major deal with the Central Asian republics of Kazakhstan and Turkmenistan to build a natural gas pipeline along the Caspian Sea, a move that could strengthen Russia's monopoly on energy exports from this region".

Conclusion
The Nabucco project was started in February 2002, but up to now, no agreements exist committing both the suppliers and the consumers. All the above data and notes expose the weak policies, wavering and the lack of "political will" for this Project.
The European countries, even whilst complaining of Russian gas dependence, either sign bilateral agreements to construct new pipelines to transport Russian gas to Europe or to increase their gas drawing capacity from Russia or try to act as an energy hub for Europe. The coordinator of the Nabucco Project, OMV-Austria, in its aim to be the "gas hub" of Europe, has made agreements with Russia, which weakens the Nabucco Project. Germany is the main partner and supporter of the Nordstream gas pipeline. Eni-Italy is the main partner and contractor of the South Stream gas pipeline. BOTAS-Turkey inaugurated the TGI gas pipeline's first stage with Greece, which will reach a capacity of 8-10 bcm after the second stage at 2011, the supplier being Azerbaijan.
On January 7th 2008, Iranian gas flow to Turkey was stopped due to insufficient gas. Turkey was told that supply from Turkmenistan had failed and the supply of gas from Iranian sources was not possible due to heavy winter conditions prevailing in Iran.
Turkmenistan has signed a new gas sales agreement with Russia, now selling her gas for a price of $130 per 1000 cu. m. which will be raised to $150 in the coming years. A pipeline project is also ready to be executed, to supply gas to China. Kazakhstan and Turkmenistan signed a new agreement in the last week of 2007 to build a natural gas pipeline along the Caspian Sea to Russia to carry 20 bcm.
No one can turn a blind eye to these developments. A strong political will is necessary on the part of EU to drive this project, to overcome the delays and the poor coordination/conflicting interests among the five shareholders. To establish vigorous, strong and applicable contracts between the supplier and consuming countries is a must for the execution of the project. If Iranian gas supply cannot be achieved and the problems of gas supply from Iraq cannot be settled, Nabucco will no longer be a "freedom project".
It is vital that the EU and the USA work together and/or the USA should free the EU to make its own decisions to find and implement innovative methods of reducing energy dependency on monopolistic Russia. At a minimum, they should work to sup¬port new transit lines that bypass Russia and to limit the length of time that the EU spends being over-reliant on Russian gas.
Nabucco follows the fate and plight of the Jews as they are assaulted and subsequently exiled from their homeland by the Babylonian King Nabucco. I wonder whether a King will appear and wake up this Project.

M. Mete Göknel
Energy Strategist
(Former BOTAŞ Chairman and CEO)

Endnotes
1 Wikipedia The Free Encyclopedia, http://en.wikipedia.org
2 Nabucco Gas Pipeline International Gmbh, 2007, www.nabucco-pipeline.com
3 EUROGAS, The European Union of The Natural Gas Industry, www.eurogas.org
4 "Natural Gas, Supply and Market Security Issues" Discussion Paper 2007, OME-Observatoire Mediterraneen de L'Energie, June 2007, www.ome.org
5 "The North European Gas Pipeline Threatens Europe's Energy Security", by Ariel Cohen, Ph.D.,October 26, 2006, www.heritage.org
6 "Natural Gas, Supply and Market Security Issues" Discussion Paper 2007, OME-Observatoire Mediterraneen de L'Energie, June 2007, www.ome.org
7 Nabucco Gas Pipeline International Gmbh, 2007, www.nabucco-pipeline.com
8 Geopolitics of EU energy supply", EurActiv.com, Monday 24 September 2007, www.euractiv.com