UPDATE: Hungary's MOL Latest To Rethink Nabucco
April 24 2012 - 10:49AM
Dow Jones News
Hungary's oil and gas company MOL Nyrt (MOL.BU) Tuesday raised
serious concerns about the viability of the Nabucco pipeline
project, in yet another blow to an EU priority that's been hit by
high costs and uncertain gas supplies.
"There are many uncertainties around the Nabucco project that
would be hard to ignore. Both the financing background and the gas
source are uncertain," the company said in a statement. MOL still
supports diversification of suppliers but "we owe our shareholders
the highest possible economic justification as well," it added.
MOL is now the second major shareholder to publicly reconsider
its role in the Nabucco consortium, after Germany's RWE AG (RWE.XE)
Chief Executive said earlier this year that it could scrap its
plans for it. MOL and RWE are two of the main shareholders in the
consortium and their failure to support the project would put in
serious doubt its feasibility. Austria's OMV AG (OMV.VI) and three
other companies are also part of Nabucco.
The company's statement follows remarks by Hungary's Prime
Minister Viktor Orban Monday that MOL is leaving the project. A
Nabucco statement said the consortium has no indication of a change
in MOL's status.
"The Nabucco Pipeline project is based on a treaty that was
signed and ratified by the transit countries, including Hungary,"
said Nabucco spokesman Christian Dolezal, in a statement. "The
Nabucco shareholder in Hungary is FGSZ, a MOL subsidiary, and we
have not had any indication that this will change," he said.
Nabucco was originally designed as a 3,300 kilometer-long
pipeline project to bring Caspian gas to Austria across Turkey and
most of central Europe with the aim of easing the region's
dependence on Russian gas imports by opening up a "corridor" from
Central Asia to the European Union.
But uncertainty about the amount of gas effectively available in
the region for EU export by the end of the decade has dampened
those expectations and prompted the consortium to scale down the
project to roughly half its original size, ceding ground to
competing projects.
The European Commission, which has executive powers in the EU,
has strongly supported Nabucco as the best plan for such a
corridor, but has recently been open to accept other projects,
saying the priority is to get Caspian gas to Europe, rather than
the specific infrastructure to do that.
Marlene Holzner, a spokeswoman for European Energy Commissioner
Guenther Oettinger, said Tuesday the commission has no indication
about MOL dropping out of Nabucco, and didn't comment directly on
MOL's statement.
Azerbaijan and BP PLC --which has a leading role in the
consortium developing the Azeri field which would provide the gas
for the EU-- are working on two other, possibly complementary,
pipelines that are in direct competition with Nabucco as they would
follow a similar route.
The TANAP line would carry the gas across Turkey, while the
South East Europe Pipeline would then take proceed through central
Europe, possibly all the way to one of Europe's biggest gas hubs in
Austria. The capacity of these alternative lines is roughly half
that of Nabucco's.
Nabucco's prospects have also been challenged by the Russian-led
South Stream pipeline, whose partners include European giants like
Germany's BASF SE and France's Electricite de France SA. South
Stream would not rely on the same Azeri gas, but would provide the
commodity to the same end-markets in central Europe.
-By Alessandro Torello, Dow Jones Newswires; +32 2 741 14 88;
alessandro.torello@dowjones.com
(Gergo Racz and Veronika Gulyas in Budapest contributed to this
article.)
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