Black Sea LNG accord could 'torpedo' Nabucco gas line

Azerbaijan, Georgia, and Romania signed a memorandum of understanding to transport Azeri LNG to the European Union through a project that could come online sooner than the Nabucco gas pipeline.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Apr. 14 -- Azerbaijan, Georgia, and Romania signed a memorandum of understanding to transport Azeri LNG to the European Union through a project that could come online sooner than the Nabucco gas pipeline.

“From my point of view this is the fastest and one of the most efficient projects…to bring Caspian gas to the EU,” said Romanian Economy Minister Videanu of the Azerbaijan-Georgia-Romania-Interconnection (AGRI) project.

In addition to Videanu, the MOU was signed by Azeri Minister of Industry and Energy Natig Aliyev and Georgia's Energy Minister Alexander Khetaguri.

Under the project, plans call for gas from Azerbaijan to be piped across the Caucasus to Georgia’s Black Sea port of Kulevi where the gas will be liquefied.

From Kulevi, the LNG will be shipped by tankers across the Black Sea to a regasification terminal at Romania’s port of Constanta. There the gas will be entered into Romania’s gas grid for onward delivery to other EU states.

“Romania's national transport grid can ensure transit to the EU's single market,” Videanu said, adding that the new project could be finalized sooner than Nabucco.

Indeed, according to analyst IHS Global Insight, the AGRI project “has gained momentum largely as a result of the stalemated dispute between Turkey and Azerbaijan over gas prices and transit, thus threatening to torpedo the Nabucco gas pipeline project.”

However, officials from the three signatory nations played down the idea that the new transport corridor would threaten Nabucco, with Videanu saying that “all the natural gas transport projects to Europe are complementary” and Aliyev that AGRI “is an important project for all the states in the Black Sea region.”

Romania is one of six partner states that plan to build the EU-backed Nabucco gas line, which aims to reduce energy dependence on Russia by transporting gas to the EU from the Caspian and Middle East.

In addition to Romania, the Nabucco partner states include Austria, Bulgaria, Hungary, Germany, and Turkey.

The capacity of the AGRI project, which will cost an estimated €2-4 billion, is expected to be 7 billion cu m/year of gas, with 2 bcm/year going to Romania and the remainder heading on to the other EU states.

Earlier this year, Romania’s Deputy Economy Minister Tudor Serban said the AGRI LNG project would handle 3-8 bcm/year of LNG in a first stage.

“The amount of gas…is important, which means in up to 5 years Romania could become an important gas hub in Europe, with the potential to supply gas to Bulgaria, Hungary, Serbia, and Austria,” Serban said.

Contact Eric Watkins at hippalus@yahoo.com.

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