VIENNA: The capacity of the Nabucco pipeline could be shrunk to match lower supply, the consortium's managing director told Reuters, after criticism the ambitious project was too big to be filled with the Asian gas Europe seeks as an alternative to Russian imports.
While confident a bigger pipeline project could still succeed, Nabucco Managing Director Reinhard Mitschek said a scaled down version could easily be built because many intergovernmental and other agreements were already in place.
This week the Nabucco Consortium said it had submitted a proposal for the smaller Nabucco West Version of its pipeline project to the Shah Deniz group that plans to ship 16 billion cubic meters (bcm) of Azeri natural gas to Europe.
"We are focused on both alternatives," Mitschek said in an interview in his Vienna office. "The offer for the Nabucco base case is still on the table. Now we will work on the Nabucco West case."
The original project aimed to build a 4,000 km pipeline to transport over 30 bcm — around a third of Britain's annual demand — per year of gas into Europe in order to reduce its dependency on Russian imports.
Its critics have long said that its cost — estimated at over $12 billion — was too high and that it would struggle to find enough gas to fill it with non-Russian supplies.
This spurred the group to consider a Nabucco West pipeline that would bring Caspian gas the shorter distance from the Bulgarian-Turkish border to Austria.
Mitschek declined to put a price tag on the smaller project and said many published cost estimates for the larger version have overshot the mark. "We initially announced it would cost $7.9 billion," he said. "It is clear that it is no longer $7.9 billion but twelve to 15 billion is far too high."
The Shah Deniz 2 group is expected to announce the winning pipeline project this summer, with a final investment decision planned for 2013.
Nabucco's six shareholders are Austria's OMV, Germany's RWE, Hungary's MOL through its gas pipeline operator FGSZ, Turkey's Botas, BEH of Bulgaria and Romania's Transgaz.
MOL and RWE set off a debate over the feasibility of Nabucco's original size earlier this year and threatened to leave the group.
Mitschek, who predicted gas fields in Turkmenistan and Iraq could provide additional supplies over the next decade, said no partner has taken steps to leave the consortium.
Discussion with other potential partners beyond Germany's Bayerngas continue but it was too early to say what might happen, he added.
"I have no information about concrete steps one shareholder has taken to leave the project but I don't want to rule out that the shareholder structure will be modified in the future," Mitschek said.
"There are discussions with others but it is too early to say what will happen."
Nabucco competes with several other pipeline projects to bring the Shah Deniz 2 gas to Europe.
The Trans Adriatic Pipeline (TAP) project aims to pump the gas through existing Turkish infrastructure into Greece, Albania and into Italy.
TAP is run by Norway's Statoil — also a partner in the Shah Deniz 2 gas field, alongside BP — Germany's E.ON Ruhrgas, and Switzerland's EGL.
Italy's Enel has also voiced its interested in joining TAP.
Another option would be BP's South East European Pipeline (SEEP) is a project, which would mainly use existing gas infrastructure to pump Azeri gas through southeastern Europe, including Hungary, into Western Europe.
Nabucco chief says cutting pipeline capacity an option
