Asa-Irada,
14, April 2008

The European Union has three short-term options to transport Caspian energy resources bypassing rival Russia, the EU external relations commissioner Benita Ferrero-Waldner has told The Financial Times.

One would be to close a 60km gap between Azeri and Turkmen offshore installations with a mini-pipeline. Another would be to build an onshore link to Kazakhstan, to connect with a route to Azerbaijan. The third would be to compress the gas into liquid form and take it by tanker across the sea, Ferrero-Waldner said.

She said there were some political hurdles to building an undersea pipeline to Azerbaijan, where it would connect to an existing west-bound route.

The commissioner said the Turkmen president had last week guaranteed that 10bn cubic metres of gas a year would be available for the EU.

President Gurbanguly Berdymukhammedov's pledge comes amid intense competition for access to Turkmenistan's huge gas reserves since the death of its isolationist former leader, Saparmurat Niyazov, last year, the FT said.

Berdymukhammedov has promised increased supplies to Russia, the biggest buyer of Turkmen gas, through a proposed pipeline, and to China via a long trans-Asian route planned for completion next year. A southern route to Pakistan has also been mooted, The Financial Times said.

Ferrero-Waldner said the Turkmen offer, which would run from next year, needed a European business response through investment in pipeline infrastructure and exploration. The US and EU have been pressing for gas to be shipped west across the Caspian, ideally through an undersea pipeline that would avoid Russian territory and connect to the proposed 3,300km NABUCCO route, which would link the Caspian and central Europe.

Industry experts say it is unclear how or when the gas could be delivered. Virtually all current Turkmen export production, of 50bcm, is covered by contracts running to 2028. The country has big additional reserves, but these have yet to be developed. Developers face technical difficulties and legal and political objections from Russia and other Caspian shore states over reserves beneath the sea, according to the FT.

Reinhard Mitschek, managing director of NABUCCO, said it was on track to start construction of the $7.9bn project in 2010. The first phase, from Austria to Ankara (via Hungary, Romania and Bulgaria), would be completed in 2013. From the Turkish capital it would connect with a pipe running east and then be extended to the Turkish border. The first gas for the pipeline would come from Azerbaijan's Shahdaniz offshore field, which would initially supply 8bcm annually. Other potential suppliers included Kazakhstan, northern Iraq, Egypt and Iran, Mitschek said.

Even when running at its full 30bcm a year capacity, NABUCCO will supply only a small portion of Europe's 500bcm needs. The bulk of gas will continue to come from Russia, the report said.

NABUCCO won a big boost earlier this year when RWE, the German utility, joined national energy companies from Austria, Hungary, Romania, Bulgaria and Turkey in backing the scheme.