Why not extend and reverse Nabucco?

This just in from London-based Polish gas expert Greg Pytel

Greg Pytel

Extended and reversible Nabucco – competitive and secure natural gas market for Europe

There has been an ongoing debate about constructing Nabucco pipeline: a pipeline designed to transport natural gas from Central Asia, Middle East, Caspian and even North Africa via Turkey and then Balkan countries to Hungary and Austria. Nabucco would bring a degree of diversification of gas supply routes to Europe from southern and eastern directions. At present there is a renewed initiative to make Nabucco happen.

In the background a new significant region of exploration and production of natural gas is emerging: Central and Eastern Europe, in particular Poland, Austria and Hungary. Whilst there was a lot of exploration work done in a number of past decades there was relatively very little, if any, of competitive, high-tech, modern nature. With degree of caution considering this and unconventional gas prospects, the region
looks very attractive.

The prospective natural gas conventional reserves in Poland, Austria and Hungary contain at least 4 tcm and with inclusion of unconventional gas they can be as high as 15 tcm or even more. Considering the real costs of Russian gas (from difficult and inaccessible regions transported for many thousand of kilometres), CEE gas, even from unconventional reserves, should be very competitive.

This makes a case for building Nabucco as reversible gas pipeline from Turkey, through the Balkans, Hungary, Czech Republic, Poland, Baltic states up to Finland.

The highlights of the reversible and extended Nabucco:

- trunk line allowing distribution of the locally produced gas, balancing supply and demand along north – south axis and interconnecting with the western European gas network in east – west direction: it resolves a great number of issues related to interconnections in north – south direction and it also eases the pressure on the issue of “feeding” the pipeline in Turkey (as it is a interconnector and transport route for local CEE gas production)

- new route of gas supply to Finland and the Baltic states opening a competitive market

- integration of 50 bcm Latvian storage facility into pan-European network

- Poland, Austria, Hungary are new significant producers with interconnectors north-south and east-west to unify the market

- connecting Italy, Balkans and down to Turkey with Turkey playing a special role of a hub for gas supply from North Africa, Middle East (Iraq, etc) and Central Asia, Caspian.

This results in 7 supply hubs for Europe:

1) Russia directly,

2) Germany/Austria (Russian gas when Nord and South Streams are built)

3) CEE own production

4) Norway

5) existing supply from North Africa

6) LNG

7) Turkey: gas from Central Asia, Middle East, alternative route for Russian gas and possibly North Africa. Furthermore it will be a significant step in development of ever closer relationships between the EU and Turkey.

Nabucco will be a trunk line allowing distribution of the locally produced gas, balancing supply and demand along north – south axis and interconnecting with the western European gas network. Furthermore it would enable the use of Latvian gas storage (around 50 bcm) for the benefit of the entire Europe, Baltic states, including Finland, and would provide alternative source of supply gas to Russian gas.

Reversible Nabucco, from Turkey to Finland, will be a significant step towards competitive and secure natural gas market in Europe integrating diverse routes of supply.