VIENNA (Dow Jones)
The consortium behind the Nabucco gas pipeline has signed letters of intent with seven European companies for deliveries of gas through the pipeline, the consortium's managing director Reinhard Mitschek said Friday in an interview with Dow Jones Newswires.
"We have signed letters of intent with seven big, reputable companies in Europe for long-term deliveries of gas through the Nabucco. After the open season procedure, we will have a clear view of the exact volumes to be contracted," Mitschek said.
The open season will commence towards the end of the first quarter of 2008 and expectedly close five months later, Mitschek said.
The planned 3,300-kilometer-long pipeline, which is to transport gas from Turkey to Austria, through Romania, Hungary and Bulgaria as of 2012, is seen as an important strategic project that will reduce Europe's reliance on Russian gas. Market observers and analysts have expressed skepticism over whether enough gas could be secured to fill the pipeline's annual capacity of 31 billion cubic meters.
Mitschek Friday said the consortium expects to tap into the Russian Bluestream Pipeline to guarantee the initial capacity of 8 billion to 12 billion cubic meters is utilized.
He said the Nabucco project shouldn't be seen as an anti-Russian project, but rather a pro-European project, and an advantage to Russia.
"We would welcome Bluestream gas into the Nabucco pipeline," Mitschek said.
"The Nabucco project is an added value for both Europe and Russia and Russian gas, because what we deliver and secure is diversification of gas supply, and, more importantly to Russia, a diversification of the transport routes. Bringing Russian gas via several routes to Europe will secure increase security of supply in Europe," Mitschek said.
He said an agreement with Bluestream's owner OAO Gazprom (GAZP.RS) would be for long-term supply of ten years or more.
Mitschek furthermore said the Nabucco consortium has already decided on who the sixth partner in the consortium will be, though he refused to name the company.
"The selection process has been finalized. We have a commercial offer which is accepted by all the partners. Now we are expecting the formal approvals of the supervisory boards of the partner companies," Mitschek said.
Media reports have named Gaz de France (1020848.FR) and RWE AG (RWE.XE) as the two most likely candidates, with several unnamed sources naming RWE as the new partner.
Another future partner could be Azerbaijani state-owned oil and gas company Socar. The Austrian consortium-partner OMG AG (OMV.VI) recently signed a memorandum of understanding for potential gas deliveries from Azerbaijan to the pipeline, but also kept a door open for even closer ties.
"The people in Socar are now evaluating whether it could be of value for them to also join our project, as a strategic partner, as a financial partner, or as a supplier. In the consortium, we had discussions on whether Socar could be a seventh financial partner, and the shareholders found that it could be an additional value," Mitschek said.
Whether the project will be feasible, financially, however rests on the approval of the European Commission of an exemption from E.U. competition law that would allow the Nabucco partners to occupy 50% of the capacity themselves.
"We have no reason to doubt that we will get the approval. The project is supported by the commission," Mitschek said, adding that a decision by the E.U. is expected at the end of the first quarter of 2008.
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