Turkey signs up to Nabucco

International agreement on construction of the Caspian-to-Europe pipeline has now been ratified by all five transit countries.

The Turkish parliament yesterday completed the process of ratifying a treaty enabling the construction of the Nabucco pipeline, which is intended to bring gas from the Caspian and Middle East to Europe.

Turkey is the fifth and final transit country to ratify the intergovernmental agreement on the Nabucco pipeline.

The other countries are Austria, Hungary, Bulgaria and Romania.

Reinhard Mitschek, the managing director of the Nabucco Gas Pipeline consortium, said that the signing of the intergovernmental agreement had been a “significant breakthrough” in the realisation of Nabucco and that the ratification in all parliaments was an “important further milestone”. 

The intergovernmental agreement (IGA) provides a stable legal framework for 50 years, including a guarantee that 50% of the pipeline’s capacity will be reserved for the shareholders and the remaining 50% offered to third parties. The IGA is also supposed to offer firm guarantees to supplier countries.

The 3,300 kilometre Nabucco pipeline will bring gas from the Caspian and Middle East to Austria via Turkey, Bulgaria, Romania and Hungary. Construction of the pipeline is expected to start in 2011 and the first gas should start flowing in 2014.

The pipeline’s shareholders are Austria’s OMV Gas&Power, Hungary’s MOL, Romania’s Transgaz, Bulgarian Energy Holding, Turkey’s BOTAS and Germany’s RWE.

Stefan Judisch, the chief executive of RWE Supply and Trading, said that the vote in the Turkish parliament was a “clear signal” that Turkey “unequivocally supports the goal of achieving greater freedom of choice, security of supply and more competition in the gas market”.

The plans for Nabucco received another boost yesterday when the European Commission announced that it was providing €200 million in fast-track financing for the project. Nabucco is expected to cost €8 billion in total.