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Nabucco "legally finalized" as transit states sign project support agreements

09. June 2011. | 11:17

Source: Novinite.com

The legal framework for the Nabucco gas pipeline has been finalized as the five transit countries - Austria, Bulgaria, Hungary, Romania and Turkey – have signed Project Support Agreements (PSAs) with the Nabucco Consortium.

The legal framework for the Nabucco gas pipeline has been finalized as the five transit countries - Austria, Bulgaria, Hungary, Romania and Turkey – have signed Project Support Agreements (PSAs) with the Nabucco Consortium.

The signing of the Project Support Agreements (PSAs) between NABUCCO Gas Pipeline International GmbH and the responsible ministries of the five transit countries took place Wednesday in Kayseri, Turkey.

The PSAs are bilateral, legal agreements specific to and between the Nabucco Companies and the government of each transit country. They represent a significant step in the advanced development stage of the Nabucco Pipeline, the Nabucco Consortium said Wednesday.

The main elements of the PSAs are the affirmation of an advantageous regulatory transit regime under EU and Turkish energy law; the protection of the Nabucco Pipeline from potential discriminatory changes in the law; and support for legislative and administrative actions for the further implementation of the project. The PSAs also mark a commitment by each government to support the project.

Together with the Intergovernmental Agreement, the PSAs are a necessary prerequisite for the successful financing of the Nabucco project. According to Nabucco Gas Pipeline International GmbH, they create the stable, long-term regulatory regime, which is required by the group of international lenders to secure the financing of one of the largest single gas transmission projects worldwide.

"The signing of the PSAs is a further vital milestone for our project and cements our partnership with the governments of the transit countries," commented Reinhardt Mitschek, Managing Director, Nabucco Gas Pipeline International GmbH. "Today also marks the first meeting of the Nabucco Political Committee, which will ensure effective coordination between the transit countries. We are satisfied with the unique solid basis of the project and welcome the support the project is receiving from both political and financial quarters. Nabucco symbolises the future of global energy cooperation; connecting businesses, consumers, countries, and cultures and will ensure diversity and security of supply for many decades to come."

"The shareholders are strongly committed to the Nabucco pipeline and we are confident about the project's encouraging progress to date. Demand for gas in Europe is expected to rise considerably in the next decade and the Nabucco pipeline will be the preferred transportation method for gas suppliers in the Caspian Region. The negotiations with suppliers are going well and the interest in Nabucco is getting stronger every day," said in turn Werner Auli, Chairman of the Nabucco Steering Committee and Head of Gas & Power at OMV.

Nabucco is supposed to become "the new gas bridge from Asia to Europe." It will directly connect the world's richest gas regions - the Caspian region and the Middle East, to the European consumer markets. The pipeline will link the Eastern border of Turkey, to Baumgarten in Austria - one of the most important gas turntables in Central Europe - via Bulgaria, Romania and Hungary. The Nabucco gas pipeline is supposed to reduce EU's energy dependence on Russia by bringing in natural gas from the Caspian region, Central Asia, and the Middle East.

In spite of the new progress, in May 2011, Nabucco Gas Pipeline International GmbH pushed back the start of construction of its EUR 7.9 B pipeline to carry Caspian natural gas to Europe to 2013; thus, Nabucco is now expected to start operations in 2017 instead of 2015, as previously expected.

Nabucco Gas Pipeline International GmbH (NIC) was set up on 24 June 2004 to develop, construct and operate the Nabucco pipeline. Headquartered in Vienna, it is an unbundled midstream-company under EU law. NIC is owned by the Nabucco shareholders and is responsible for the development, construction, operation and capacity trading and allocation for the Nabucco pipeline.

NIC will be the only company in direct contact with the shippers and will offer a one-stop-shop solution, operating as an independent economic entity in the market, and acting independently from its parent companies. The pipeline system will be constructed by the National Nabucco Companies (NNCs), which are subsidiaries of NIC in each of the transit countries.

The direct investments in the Bulgarian economy from the construction of Nabucco will be about EUR 400 M and a few hundred jobs. Another about 1000 jobs will be created indirectly by the project.

The Nabucco shareholders are: Bulgarian Energy Holding (Bulgaria), Botas (Turkey), MOL (Hungary), OMV (Austria), RWE (Germany) and Transgaz (Romania), Each shareholder holds an equal share of 16.67% of Nabucco Gas Pipeline International GmbH. Nabucco is estimated to cost EUR 8 B, and Bulgaria, as a partner with 1/6 of the shares, will be expected to provide 1/6 of the total sum, or about EUR 1.3 B, rather than finance just the section on its territory. Bulgaria plans to finance its share in Nabucco with a EUR 1.2 B loan from the European Investment Bank.

Nabucco Gas Pipeline International GmbH, the Vienna-based project company, has been involved in talks with the European Bank for Reconstruction and Development, the European Investment Bank, and the International Finance Corporation, a member of the World Bank Group, asking for an EUR 4 B loan. These negotiations are expected to be completed in 2011.


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