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CORRECTED-Nabucco progresses as Hungary completes permit process
August 14, 2012 / 10:46 AM / 5 years ago

CORRECTED-Nabucco progresses as Hungary completes permit process

(Corrects pipeline length in second para; removes reference to $12 bln cost in para 8, fixes spelling of Baumgarten)

By Michael Kahn

PRAGUE, Aug 14 (Reuters) - The Nabucco pipeline, which aims to reduce Europe’s reliance on Russian gas, has moved a step forward after Hungary became the first country to finish its permitting process, the project’s officials said on Tuesday.

The 1,300 km pipeline aims to bring Caspian gas supplies to Europe to reduce dependence on Russian gas imports.

It will take a northern route from the Turkish-Bulgarian border to Baumgarten in Austria and is competing with the Trans-Adriatic Pipeline (TAP), which would take a southern route into Italy. Nabucco would cross 384 kilometres of Hungarian territory.

The project has received the last environmental permit for Hungary it needs before construction can begin in the eastern European country.

The approval marked a step forward for the scaled down Nabucco West pipeline that Azerbaijan’s Shah Deniz II consortium - led by BP and Statoil - has shortlisted as the route for Caspian gas.

“The granting of this permit is a substantial step forward in Hungary and signifies the advanced stage of development of Nabucco West,” the project’s managing director Reinhard Mitschek said in a statement.

Preparations for the Nabucco project began in 2002 and a final investment decision on whether the pipeline will go ahead is expected this year or early in 2013.

If it does go ahead, the pipeline is expected to be operational by 2017.

Some critics doubt the pipeline will be built due to the high cost, large scale, competing projects and changing politics in the countries it will cross.

So far, Nabucco’s six shareholders are Austria’s OMV AG , Germany’s RWE, Hungary’s MOL, Turkey’s Botas, Bulgaria’s BEH and Romania’s Transgaz have stood by the project.

As part of the project, the Shah Deniz II gas consortium plans to ship 16 billion cubic metres of gas per year to Turkey and the European Union.

Next year, Shah Deniz II is expected to decide on the entire route for its gas and whether it wants the last stage of the journey to take a southern route through Italy or a more northern route into Austria.

BP operates the Shah Deniz II gas field, which is thought to contain 1.2 trillion cubic metres of gas and the company holds a 25.5 percent stake, as does Statoil. The rest is divided between Azerbaijan state oil company SOCAR, Russian LUKOIL, Iran’s NICO, Total SA and TPAO. (Additional reporting by Henning Gloystein in London; Editing by Nina Chestney and Alison Birrane)

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