August 27, 2010 / 2:22 PM / 9 years ago

RWE signs Nabucco cooperation deal with Iraq Kurds

* RWE says expects talk on Kurdish gas supply very soon

* Revenue to be shared to support regional reconstruction

FRANKFURT, Aug 27 (Reuters) - Germany’s RWE (RWEG.DE) on Friday said it had signed a cooperation agreement with the Kurdish Regional Government in Iraq that included future gas supply for the Nabucco pipeline project.

A statement issued by RWE in Germany quoted Iraqi Kurdistan’s natural resources minister Ashti Hawrami as saying that up to 20 billion cubic metres of gas a year could be fed into the pipe to bring gas to Turkey and Europe.

Nabucco shareholders said on Monday they had decided to build two feeder lines to Turkey’s borders with Georgia and Iraq, but had opted against a link to Iran due to the political situation. [nLDE67M0L8]

Iraq hopes opening its gas sector to foreign investment but exporting gas is controversial because of Iraq’s inability to meet demand for electricity. Seven years after the U.S. invasion, the national grid supplies just a few hours each day. [nLDE6711LZ]

RWE is a shareholder in the 7.9 billion euros ($10.05 billion) Nabucco plan, which aims to cut Europe’s dependence on Russian gas by bringing Caspian region supplies directly to Turkey and Europe.

While underscoring long-running efforts to sign up supplier countries along the planned route, the statement did not set out concrete steps or time schedules. An investment decision for Nabucco is due in the first quarter 2011 at the latest.

RWE said the deal with the Kurdish region envisaged RWE helping to develop and design domestic and export gas transport infrastructure and create a route to market for Iraqi Kurdistan’s gas.

Export revenus would be shared and available to the whole of Iraq, providing support for the country’s reconstruction.

Hawrami said in the RWE statement: “The location of gas reserves in the Kurdistan Region of Iraq makes them ideally placed to gain access to the secure and profitable European gas market.”

Stefan Judisch, Chief Executive of RWE Supply & Trading, said he hoped to reach an agreement on the planned supplies “very soon”, without elaborating.

“This will underpin strong progress we are making elsewhere on preparing construction of the Nabucco pipeline in the near future,” he said.

Nabucco says gas from Turkmenistan, Iraq and Azerbaijan should be enough to fill the pipeline but it has yet to sign a binding supply agreement with any of them.

Shareholder OMV said earlier this month the final investment decision for the pipeline will be made in the first quarter of next year at the very latest after it has determined demand in an open season process, probably in the fourth quarter of 2010.

Nabucco consortium members which also include Austria’s OMV (OMVV.VI) Hungary’s MOL (MOLB.BU), Romania’s Transgaz TGNM.BX, Bulgaria’s Bulgargaz and Turkey’s Botas have been referring to Iraq as a potential supplier of 8-10 bcm a year in the past.

Reporting by Vera Eckert

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