THE EUROPEAN Union and Turkey have struck a ground-breaking gas pipeline deal unlocking a potential energy bonanza in the Caspian basin after more than a year of deadlock, according to senior EU officials.
The agreement, to be signed in Ankara on June 25th, represents a major boost to the EU’s Nabucco pipeline project, which is intended to transport natural gas to Europe from central Asia, the Caucasus and the Middle East, and is the key to breaking the Kremlin’s stranglehold over Europe’s gas imports.
“This is a complete breakthrough,” said a senior EU official involved in the negotiations. “The Turks have accepted our terms. There is no conditionality.”
The €9 billion Nabucco project is at the centre of a contest pitting Russia against the EU and involving Turkey, Germany, Austria, Azerbaijan and the authoritarian regimes of central Asia in the effort to secure Europe’s gas needs while limiting the hold Moscow and gas monopoly Gazprom have over supply lines.
The case for Nabucco is debated but was reinforced by Russia’s gas war with Ukraine in January, which caused havoc with Gazprom supplies to eastern and central Europe. There had been similar disputes in 2006 and 2007.
Nabucco, stretching more than 3,200km (2,000 miles) from Turkey’s eastern border through the Balkans to Europe’s main gas hub at Baumgarten, outside Vienna, would be the main route for pumping gas to Europe not controlled by Gazprom.
But the plan had faltered over deadlock between the EU and Turkey over the pipeline transit agreement. More than half the pipeline is to be located in Turkey, making it the gatekeeper of Europe’s energy supplies.
Ankara has been driving a hard bargain, insisting on collecting a “tax” on the gas being pumped and demanding 15 per cent of the transit gas at discounted prices. This, say EU officials and the six-company consortium that is to build and run the pipeline, would render it financially unviable.
The stalemate was broken at a summit in Prague last Friday between the EU and the countries involved. “The 15 per cent demand has gone,” said European Commissioner for energy Andris Piebalgs.
“We’ve agreed on cost-based transit. We’re very close to a conclusion.”
An EU envoy to the region worried that “nothing is done until it’s done”. But European Commission president José Manuel Barroso said Turkish president Abdullah Gul assured him the deal would be signed within weeks.
The Turkish leader indirectly linked any Nabucco deal with progress on Ankara’s negotiations with Brussels on joining the EU.
The negotiations are being blocked by Greek Cypriots, while several big EU states are quietly happy to see Turkey’s EU bid frozen. But Mr Barroso and others insisted Ankara was not setting conditions for a Nabucco agreement.
The EU imports about one-third, or 140 billion cubic metres (bcm), of its gas from Russia. The “southern corridor”, entailing Nabucco and two other pipelines, is supposed to pump 60bcm a year, or 10 per cent of requirements, by 2020, bypassing Russia.
Building of the Nabucco pipeline has been delayed while the projected costs have soared, leading critics to describe the scheme as a pipedream. But the Prague summit and the imminent pact with Turkey appear to have resurrected the project.
As well as Nabucco, the Europeans spoke specifically for the first time about supporting the building of a pipeline under the Caspian Sea connecting Turkmenistan and central Asia to Azerbaijan.
The central Asian gas was up for grabs, said the senior EU official, and if Europe did not get there first, it would go to Russia or China. – ( Guardian service)