With the planned Nabucco natural gas pipeline in southern Europe hitting snag after snag, Russian natural gas giant Gazprom is considering the construction of a second Baltic Sea pipeline to go with the just-finished Nord Stream. With unconventional natural gas from the US flooding the market, however, the strategy is not without risk.
Seven years later, it is now clear who won the duel. When the government of Social Democratic Chancellor Gerhard Schröder came to an end in 2005, both he and his foreign minister, Green Party éminence grise Joschka Fischer, embarked on second careers as energy lobbyists.
Schröder is in the service of Russian energy giant Gazprom — as chairman of the board of the Nord Stream natural gas pipeline on the Baltic Sea floor. The pipeline went into operation six months ago and now natural gas from Siberia flows through the 1,200 kilometers (745 miles) of pipe to the German city of Greifswald.
Fischer is an advisor to Nabucco, the consortium favored by the European Union, which also includes German electric power company RWE. The Nabucco pipeline is intended to transport gas from the Caspian Sea region, along a 3,900-kilometer southern route to Baumgarten in Austria, bypassing Russia in the process. But not a single meter of the pipeline has yet been laid, and that will likely remain the case. The Nabucco project will not be implemented as planned.
Three weeks ago, Hungary’s MOL Group voiced significant doubts about the project, and now another consortium member is thinking of pulling out. RWE executives have already prepared politicians in Brussels and Berlin for the worst case in recent weeks. They haven’t made a final decision yet, but the chances that the company will remain committed to Nabucco are not good.
One reason is that the estimated total cost of over €15 billion ($19 billion) is more than twice as high as the original projection. Another is that potential suppliers Azerbaijan and Turkmenistan have not yet provided definitive commitments to supply natural gas to the pipeline.