Sunday July 12, 10:58 PM
EU nations, Turkey to sign landmark Nabucco deal
By Burak Akinci
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ANKARA (AFP) - EU countries and Turkey are to sign off Monday on Nabucco, a landmark pipeline project that could reduce Europe's reliance on Russian gas but still wants for big suppliers.
Turkish Prime Minister Recep Tayyip Erdogan is to host the signing of transit agreements between his country, Austria, Bulgaria, Hungary and Romania at a ceremony in Ankara.
Backers hope the 3,300-kilometre (2,000-mile) pipeline will one day pump as much as 31 billion cubic metres of gas from the Caspian Sea to Austria via Turkey and the Balkans, bypassing Russia.
Nabucco is expected to become operational in 2014 at an estimated cost of 7.9 billion euros (10.9 billion dollars).
In a sign of the importance being attached to the project, Monday's ceremony will be attended by European Commission chief Jose Manuel Barroso; Prime Minister Nuri al-Maliki of potential supplier nation Iraq; and US special envoy for Eurasian energy Richard Morningstar, Turkish officials said.
Two European banks have expressed readiness to support the project financially, but analysts say securing the cost could be difficult amid the global economic slowdown and are unconvinced enough gas supplies will be found.
"Even if the necessary financing is found after some delay, there is still the big question of procurement," said Necdet Pamir, a Turkish energy expert.
Nabucco got a boost on Friday when Turkmen President Gurbanguly Berdymukhamedov signalled his nation's willingness to get involved.
Turkmenistan, like two other potential suppliers in Central Asia, Kazakhstan and Uzbekistan, had held back from supporting the pipeline at a meeting in May in Prague.
"Without these three countries, Azerbaijan will be the main provider, but it does not have sufficient gas for this project," said Pamir.
He estimated that Baku could provide only about 4.0 billion cubic meters of gas a year to Nabucco by the time it had fulfilled its existing export commitments. "This amount will not satisfy anyone," Pamir said.
Azerbaijan raised concerns among Nabucco's backers last month when it signed an agreement to export gas to Russia, starting in 2010.
Nabucco is a rival to Russia's South Stream project, developed by Russian gas giant Gazprom and Italy's Eni (Milan: ENI.MI - news) , which will channel Russian gas through Bulgaria to Western Europe under the Black Sea.
The signing of the Nabucco agreement has been delayed several times by Turkey's desire to use 15 percent of the gas flowing through the pipeline for domestic use or even for re-export.
Turkish news agencies reported on Sunday that Ankara had now dropped this demand in return for a 50 to 60 percent share of the tax revenue from the project, which could be up to 450 million euros (630 million dollars) a year.
A Turkish foreign ministry official said Monday's signing of the intergovernmental agreement would "serve to boost credibility in the Nabucco project and will lead gas suppliers to think seriously about the pipeline."
Egypt, Iran and Iraq have all been mentioned as potential providers, although Pamir dismissed their participation as "not credible" as things stand.
Representatives from Azerbaijan, Egypt, Syria and Turkmenistan were also expected at the signing ceremony, the Turkish foreign ministry official said, speaking on condition of anonymity.
Turkey's foreign ministry has flagged up Nabucco as a top priority and hopes it will strengthen Ankara's ties with the EU.
"The Nabucco project is expected to bring a new dimension to our relations, based on mutual trust and cooperation," a ministry statement said this week.
Turkey had at one point threatened to back off from Nabucco if EU accession talks were further delayed.
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