Thursday, September 18, 2014

Drew EGC Report

Reinhard Mitschek: “Nabucco Will Be Profitable”

Reinhard Mitschek speaking at the 2012 Frankfurt Gas Forum
Reinhard Mitschek speaking at the 2012 Frankfurt Gas Forum

RWE plans to quit the Nabucco pipeline project reportedly due to the small amount of gas that Azerbaijan promised to provide. In addition, Russia started building its South Stream pipeline on Friday last week.

With these events in mind, Natural Gas Europe asked Reinhard Mitschek, Managing Director of the Nabucco Gas Pipeline, how this will affect his project to deliver Caspian gas to Europe

Mr. Mitschek, how will the withdrawal of RWE affect the Nabucco project?

Mitschek: Of course, we regret that RWE decided to quit. But the project is robust despite changes in the Shareholder structure. We are on track and will finish the project according to our timeline.

When starting in 2018, Azerbaijan will just offer ten bcm/a. Will Nabucco be cost-effective then?

Mitschek: The Nabucco pipeline is able to transmit up to 23 bcm/a. The volume of gas production in Azerbaijan will increase to 20 bcm/a by 2015 and up to 40-50 bcm/a by 2025. So we are confident to receive enough gas to meet Europe´s demand. Most of all, we are convinced that Nabucco will be profitable.

South Stream seems to be on track as well. Is there a risk that Azerbaijan will give its gas to the Russians instead?

Mitschek: For Azerbaijan, Europe is an important market and a reliable partner. As Europe intends to become more independent of Russia, Azerbaijan wants to diversify as well. They will deliver Caspian gas to several customers, both to Russia and Europe.

So RWE is wrong?

Mitschek: In my eyes, there is no reason to doubt Nabucco´s success. As in every project, there are remaining risks. But we established a risk management, identified potential threats, and we are working on them. For me, there is no doubt that the Shah Deniz consortium will decide on Nabucco in June next year.

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