Nabucco Cost Estimate Rises 58%
by AFX News Limited
May 29, 2008
The estimated project cost of the Nabucco gas
pipeline has been raised to 7.9 billion euros to reflect the impact of higher
steel and crude oil prices, Nabucco Gaspipeline International GmbH said in a
The project's costs were previously pegged at around 5 billion euros in a
2005 feasibility study by the Nabucco consortium.
"Since then, crude oil prices have more than doubled -- which consequently
has also led to higher prices for all primary energy sources -- also prices for
steel," the project's managing director, Reinhard Mitschek, said. "In addition,
steel is in high demand because of the large numbers of big projects."
"The competitiveness and the economics of the project will be unaffected,"
the consortium said. "High demand for energy leads to higher gas prices as well
and, therefore, also to higher transportation fees, which make Nabucco
Nabucco plans to maintain the project's financing approach, with one-third
provided by the consortium's members and the remainder split evenly among
commercial banks, international financial institutions and export credit
agencies, Mitschek told Thomson Financial News.
"The pipeline project's deadlines have not changed on account of the new
financing estimate," Mitschek said. The consortium's final investment decision
is expected in the spring of 2009, construction work is slated to start in 2010,
and gas is expected to flow through the pipeline as of 2013.
The consortium said the new cost estimate is the outcome of its recent capex
update, which it based on an actual market survey among major material and
The Nabucco consortium consists of Austria's OMV AG, Bulgaria's Bulgargaz,
Germany's RWE AG, Hungary's MOL Nyrt, Transgas of Romania and Botas of Turkey.
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