Monday

30th May 2016

Setback for EU plan to curb Russia gas dependency

  • Russia uses gas dependency to exert political pressure on former Iron Curtain countries (Photo: eni.com)

EU plans to lower dependence on Russian gas in south-eastern member states have suffered a setback with the death of the "Nabucco" pipeline scheme.

Austrian firm OMV, part of the Nabucco consortium, said on Wednesday (26 June) that Azerbaijan, the gas supplier, has opted for the rival "Tap" pipeline instead.

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"[Azerbaijan's] Shah Deniz II consortium informed OMV, as a shareholder of Nabucco Gas Pipeline International, about the decision on their preferred gas transportation route to Europe. The Nabucco West project was not selected by the consortium," it noted on its website.

The European Commission has declined to comment pending Baku's official announcement, due on Friday.

It said in the past it does not matter whether Nabucco West or Tap is built because both of them square with its "southern corridor" scheme - plans to pump gas directly from the Caspian Sea to Europe, bypassing Russia.

Both pipelines were to bring 10 billion cubic metres (bcm) of gas a year from the Caspian region to EU countries in the next five or so years.

But there is a big difference.

Tap is to run from the Turkish border via Greece, Albania and the Adriatic Sea, to Italy. Nabucco West was to have run from Turkey via Bulgaria, Romania and Hungary, to Austria.

Greece depends on Russian gas for 58 percent of consumption, while Italy's dependence is just 22 percent.

Neither country was badly hit in the 2008/2009 Russia-Ukraine gas crisis.

But in Bulgaria, which depends on Russia 100 percent, street lights went out in Sofia and electricity supplies to hospitals were put at risk. Dependency is also high in Hungary (56%) and Austria (52%).

Both Tap and Nabucco West are less ambitious than the EU's original scheme, "Nabucco Classic," which was to have pumped 31 bcm a year from Azerbaijan, Iran and Turkmenistan to Austria, but which fell by the wayside.

For his part, Azerbaijan President Ilham Aliyev said in Brussels last week he has 2 trillion bcm of reserves, most of which is earmarked for Europe.

But there are signs the authoritarian leader is using gas to force political concessions.

The commission in May circulated a draft EU-Azerbaijan "Strategic Modernisation Partnership" treaty, giving Aliyev privileged status among other post-Soviet leaders.

Meanwhile, Aliyev is expected to delay signature of Tap contracts until September or October, the same time as presidential elections.

The timing, say activists, such as Khadija Ismayilova, a Baku-based journalist and free speech campaigner, is designed to gag EU critics on democratic standards.

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