Key agreement on Nabucco Project to be signed late this month

A key intergovernmental agreement is expected to be signed late this month to launch the construction of the long-planned Nabucco natural gas pipeline project that will transfer gas from the Caspian basin to Europe via Turkey. After bridging their differences on the project in the last month's South Corridor summit in Prague, Czech Republic, which holds the EU's rotating term presidency, Turkish and EU officials, and other partner countries of the project agreed to sign the intergovernmental agreement on June 25 to start the construction of the pipeline on which the EU places great importance to reduce its dependence to the Russian gas by diversifying the bloc's energy supply resources. During the South Corridor summit, Turkey insisted on collecting a tax on the gas being pumped through the pipeline and demanded 15 percent of the transit gas at discounted prices but later agreed to a cost-based transit deal. A dispute earlier this year between Russia and the gas transit country Ukraine, which left European customers without supply for two weeks in the coldest days of winter, gave added urgency to the project. The US supports the project as well. The 3,300-kilometer Nabucco pipeline is a project of nearly €8 billion. The construction of the pipeline is scheduled to start in 2011 and the first deliveries are expected in 2016 with an initial annual capacity of 8-10 billion cubic meters. In its full capacity, the pipeline is planned to transport a maximum of 31 billion cubic meters of natural gas annually. More than half of the pipeline is to be located in Turkey, making it the gatekeeper of Europe's energy supplies. Besides the Nabucco project, the efforts to carry out another pipeline project, the Arab natural gas pipeline that will transport Egyptian natural gas to the Middle East and Europe via Jordan, Syria and Turkey, are continuing. Turkey also plans to transport Iraqi natural gas to Europe. When all these projects are completed, Turkey will be the fourth biggest natural gas supplier of Europe, after Norway, Russia and Algeria.