News / Economy

Europe Opts for Gas Pipeline Running from Azerbaijan to S. Italy

Greece's Finance Minister Yannis Stournaras, (R) listens to Trans Adriatic Pipeline's Managing Director Kjetil Tungland (L) after the signing of an host government agreement in Athens, June 26, 2013.Greece's Finance Minister Yannis Stournaras, (R) listens to Trans Adriatic Pipeline's Managing Director Kjetil Tungland (L) after the signing of an host government agreement in Athens, June 26, 2013.
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Greece's Finance Minister Yannis Stournaras, (R) listens to Trans Adriatic Pipeline's Managing Director Kjetil Tungland (L) after the signing of an host government agreement in Athens, June 26, 2013.
Greece's Finance Minister Yannis Stournaras, (R) listens to Trans Adriatic Pipeline's Managing Director Kjetil Tungland (L) after the signing of an host government agreement in Athens, June 26, 2013.
George Putic
A European consortium aiming to build a natural gas pipeline from Azerbaijan to Western Europe has rejected a costlier, longer version called Nabucco in favor of the more modest Trans Adriatic Pipeline (TAP) project.

The Austrian-led consortium seeking to supply natural gas to power-hungry Western Europe says it has chosen the proposed Trans-Adriatic Pipeline, which will run about 800 kilometers through Turkey, Greece and Albania, crossing the Adriatic Sea and ending in southern Italy.

The consortium rejected Nabucco West, a more expensive project that would have built a 1,300-kilometer pipeline running through Turkey, Bulgaria, Romania and Hungary to Austria.

After a host government agreement was signed Wednesday in Athens, Greek Finance Minister Yannis Stournaras said the project will boost the economy of his debt-ridden country.

I believe it will bring jobs to our country, he said, adding that Greece will become an "energy hub for the region."

The Trans-Adriatic Pipeline is financed mainly by Norwegian, Swiss and German oil and gas companies.

The project is seen as the main competitor for the European market against the Russian-financed South Stream pipeline.  South Stream will run from Kazakhstan and Russia through Bulgaria, Serbia and Hungary, and then connect with European pipelines in Austria.

Industrialized European nations want to lower their dependence on Russian natural gas, which at the moment makes up about 30 percent of European gas imports.
The scrapped Nabucco West pipeline would have passed through many of the same Eastern European countries as South Stream, swapping Serbia for Romania.

But U.S. Heritage Foundation analyst Ariel Cohen says the Europeans did not do a good job planning and implementing the Nabucco project.
 
“Too many national oil companies are run like government bureaucracies and not like businesses, so in terms of planning and execution, in terms of lacking finances, the Europeans did not do a good job," said Cohen.
 
However, Cohen says the decision to build the smaller TAP pipeline is an achievement, especially for Azerbaijan.
 
“Because this is the first gas pipeline from the former Soviet Union that is not controlled by Russia," said Cohen. "This is a precedent and a model for Europe to get gas by pipelines from the Caspian [Sea] region or from other regions without the Russian control.”
 
The pipeline is expected to become operational in 2019, pumping 10-billion cubic meters of gas per year to Europe.

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