Divergence over Nabucco’ s Cost

Divergence over Nabucco’ s Cost

Nabucco Gas Pipeline International GmbH Managing Director Reinhard Mitschek said that the natural gas link’s revised costs “won’t be far away” from the existing 7.9 billion-euro ($11 billion) price tag, Bloomberg reported. Mitschek, speaking in an interview in Istanbul, couldn’t say when a new cost figure would be announced.

Nabucco expects gas supply deals to be signed in November, and the so-called open season to start in “spring or summer,” he said. The company plans to make a final investment decision early in 2013 and start construction late in that year, he said.

The Nabucco project is slated to bring gas from the Caspian region to Austria starting in 2017 as Europe seeks to reduce its dependence on Russian supplies. The venture includes Germany’s RWE AG (RWE), Austria’s OMV AG (OMV), Hungary’s Mol Nyrt., Bulgargaz EAD, Romania’s Transgaz SA and Ankara-based Boru Hatlari ile Petrol Tasima AS. Bayerngas GmbH is aiming to also join the project.

Companies from Europe and gas producers are showing interest to partner with Nabucco and while negotiations with additional potential partners have yet to start, they are “under preparation,” Mitschek said. He declined to comment on the State Oil Co. of Azerbaijan, also known as Socar, joining the group.


Meanwhile, Hungary’s Minister For National Development on Monday questioned the viability of the Nabucco gas pipeline, saying it lacked a firm commitment from buyers and sellers of gas , and said the cost of building it could almost quadruple to 26 billion euros, Reuters reported.

“It is fully in the fog what the ultimate price of Nabucco will be,” Tamás Fellegi, who has authority for energy matters, told a briefing for reporters in London, citing what he described as an ‘optimistic’ price range of 24-26 billion.


A spokesman for the Nabucco consortium, which is led by Austria’s OMV , said the minister’s estimate was “random” but added the consortium’s own 7.9 billion euros estimate was under review.


Fellegi added that he was considering suing a French utility over tax payments, accusing the group, which he declined to name, of taking out unreasonably large management fees from its Hungarian unit, thus reducing taxable profits.


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