By Delphine Strauss in Ankara and Ed Crooks in London
Published: July 14 2009 03:00 | Last updated: July 14 2009 03:00
Iraq has offered to supply enough gas to fill half the capacity of the proposed Nabucco pipeline, giving the project a boost even as heads of government met to sign a historic agreement approving the plan.
The offer from Nouri al-Maliki, Iraq's prime minister, to supply 15bn cubic metres of gas a year by 2015 helps address the greatest obstacle to the 3,300km pipeline from eastern Turkey to Austria: the prospect of there not being enough gas to fill it.
José Manuel Barroso, pre-sident of the European Commission, said the signing of the Nabucco agreement in Ankara by the leaders of five countries on the pipeline's route - Austria, Bulgaria, Hungary, Roman-ia and Turkey - could "open the door to a new era in the relationship between the European Union and Tur-key, and indeed beyond".
Dick Lugar, the most senior Republican in the US senate, said the agreement was "a signal to the rest of the world that partner governments will not acquiesce to manipulation of energy supplies for political ends".
Nabucco is intended to provide an alternative to Russian supplies, which have caused growing concern following the disruption caused by disputes be-tween Russia and Ukraine.
The hope is that the inter-governmental agreement will convince gas-producing countries that the project - scheduled to start in 2014 - is closer to becoming reality than rival European or Russian-sponsored schemes, and persuade them to commit the volumes needed for commercial viability.
The only supplier that will definitely be ready for the first phase of the project is Azerbaijan, but it is juggling Nabucco's de-mands against those of Russia.
Richard Morningstar, US energy envoy, described Azeri gas as a "necessary condition" but not sufficient for the €8bn ($11bn, £7bn) Nabucco project.
Hopes of securing Azeri gas for Nabucco are expected to suffer today when Bulgaria signs up with the consortium building ITGI, a rival pipeline project seeking to take gas from Azerbaijan to the EU.
Bulgaria is set to sign a memorandum of understanding for a planned spur off ITGI that could bring 3bn-5bn cu m of gas per year from Greece.
If Iraq is able to achieve its goal of supplying an annual 15bn cu m, it will fill almost half the pipeline's 31bn cu m capacity.
Oil companies are interested in investing in the country to develop its resources, including gas.
The Kurdistan region in the north of Iraq has also attracted a planned investment by a consortium of companies including OMV of Austria and Mol of Hungary, which are both members of the Nabucco group.
Nabucco executives say significant quantities of gas could be available from those Kurdish fields as soon as next year.
Recep Tayyip Erdogan, the Turkish prime minister, also reiterated his desire for Iran to be a supplier "when conditions allow".
Andris Piebalgs, EU energy commissioner, said the EU's focus now would be on encouraging Turkmenistan to participate. Stefan Judisch of Germany's RWE, the energy group that is a member of the Nabucco consortium, said Turkmenistan would be able to supply an annual 10bcm in the pipeline's first phase, but would first have to find a way through disputes over the Caspian Sea.
Gurbanguly Berdymukhammedov, president of Turkmenistan, said last week that participation in the project would help his country - which is locked in a dispute with Russia over gas supplies - to diversify its export routes.
Additional reporting by Isabel Gorst
Copyright The Financial Times Limited 2009