Nabucco Gas Pipeline, Europe

The Nabucco pipeline is a new gas pipeline (56in) that has been proposed for construction across Europe via Bulgaria, Romania and Hungary to carry gas from Turkey (Erzurum) across Europe to Austria (Baumgarten an der March).

The new pipeline has been put forward as an alternative to Europe's major reliance on gas from Russian sources. The new pipeline will broaden the scope of sourcing gas supplies towards countries such as Iran, Kazakhstan, Egypt, Turkmenistan, Syria and Azerbaijan.

The pipeline, which is expected to begin construction in 2009 will run for 3,300km (2,050 miles) across the continent of Europe and provide a new competitive gas supply for Western Europe when it is completed in 2012-2013.

The project is expected to cost between €4.6bn and €5bn ($6.1bn to $7.4bn) to construct and will be designed for a gas transport capacity of 31 billion cubic metres a year, although initial supplies are likely to be between 4.5 and 13 billion cubic metres a year.

NABUCCO PROJECT PARTNERS

The project is being developed by Nabucco Gas Pipeline International GmbH which is an Austrian registered company formed in 2004. The lead partner in the project is OMV of Austria and the remaining partners include: MOL (Hungary), Transgaz (Romania), Bulgargaz (Bulgaria), BOTAŞ (Turkey) and RWE (Germany – joined in February 2008) – all partners hold an equal 16.67% share of the project.

The pipeline project has also been included in the EU Trans-European Energy Network programme and a feasibility project for it was completed in 2004 (consortium was then called the Nabucco Company Pipeline Study GmbH) with 50% of the funding coming from an EU project grant (awarded in December 2003).

In February 2008 Gazprom, the Russian gas conglomerate, announced it was also considering participation in the project. Several other companies have expressed interest including: State Oil Company of Azerbaijan and Gaz de France.

PIPELINE CONSTRUCTION TIMELINE

The feasibility study for the project came to the conclusion that it would be best to construct the pipeline in two phases. The first of these would be the route from the Turkish capital Ankara to the natural gas hub at Baumgarten in Austria (2,000km of pipeline, this phase will start construction in 2009).

The first phase will be finished in 2012 and will then operate in conjunction with existing pipelines between the Turkish, Georgian and Iranian borders for a two year period with the initial pipeline capacity at eight billion cubic metres a year. At the same time the second phase of construction will see the remaining section of pipeline constructed between Georgia, Iran and Ankara (expected to be completed by 2013).

The final construction phase will involve the installation of additional compression stations at strategic points on the pipeline to increase its carrying capacity to 31 billion cubic metres a year.

NABUCCO CONTRACTORS AND DESIGN

The construction will begin on the pipeline in 2009. The financial close of the project is due just before the end of 2009 and FEED (Front-End Engineering and Design) contractors will be appointed by the summer of 2008.

The owners have appointed their own engineer who will oversee the project on their behalf and provide services including overall management of local FEED contractors, review of the technical feasibility study, route confirmation, preparation of the design basis, hydraulic studies, overall SCADA and telecommunications, GIS (geographic information systems) and preparation of tenders for the construction phase.

The owner's engineer contract was awarded to the UK-based oil and gas consultants Penspen Limited (DAR Consultants UK Ltd), the contract is worth €9m.