TAPI trips up Nabucco
The Nabucco gas pipeline project is facing a strong challenge from a trans-Asian project - the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline, or TAPI. While Nabucco still has no guaranteed access to Turkmen gas, the TAPI partners intend to wrap up an ultimate gas purchase deal in the first half of this year. Turkmenistan has promised gas both to Asian buyers via TAPI and to the European Union via Nabucco, a gas consortium involving Austrian, Bulgarian, Hungarian, German, Romanian and Turkish companies. Both projects need almost equal amounts of gas – 31-33 billion cubic meters per year. For TAPI, Turkmenistan is the sole resource base, while Nabucco has one more supplier – Azerbaijan.
The problem is that Ashgabat may not have sufficient gas to cater for both projects. Gennady Shmal, President of the Russian Union of Oil and Gas Producers, gives his view:
"Turkmenistan’s current gas output stands at 70-75 billion cbm. It has a number of interesting deposits that can substantially boost extraction. Also, it has gas pipelines to China, Iran and Russia. A gas pipeline to Afghanistan, Pakistan and India is of great geopolitical importance for Turkmenistan and, therefore, has more chances than Nabucco. If it is built, there will be virtually nothing left for Nabucco, which has no alternative resource base. TAPI’s construction will seriously complicate the prospect of gas deliveries for Nabucco."
All the more so given that, as things currently stand, chances are high that Afghanistan, Pakistan and India will outpace their Nabucco rivals in signing gas supply contracts, which, analysts say, may happen in the coming two or three months, whereas Nabucco risks remaining a paper construction amid no hints of any contracts with either Turkmenistan or Azerbaijan coming any time soon. Visibly strained by this uncertainty, Azerbaijan has warned its EU partners that it will not pump gas into a half-empty pipeline, unless they find a second supply source for Nabucco. Baku’s position is easy to understand. If Turkemistan stays away from Nabucco, Azerbaijan will have to pay the entire transit bill solely by itself, and in case the pipeline is only half-filled, the price for Azeri gas will go up, which may not suit the Europeans.
Time is running out for the EU to rescue Nabucco without losing face. Up to now, Brussels has viewed Nabucco, a trans-Caucasus pipeline sidestepping Russia, as challenge to Moscow’s South Stream project that will bring natural gas from the Russian Black Sea coast to southern Europe. South Stream’s implementation is expected to top the agenda of an upcoming Russian-Italian summit in Rome. The possibility of including new partners both among the project’s operators and Russian gas importers will also be discussed.