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Devil Is In Detail Of EU Energy Strategy

Participants at a Nabucco summit in Budapest in late January made it a "priority" project.
Participants at a Nabucco summit in Budapest in late January made it a "priority" project.
The European Union repeatedly emphasized unity in the wake of vows at a major meeting late last year to pursue a new energy policy.

Pledges of solidarity to develop a unified energy grid and an end to dependence on Russian gas were renewed again in January, when member states found themselves frantically meeting again when a Russia-Ukraine dispute disrupted natural-gas supplies to a freezing Central and Southeastern Europe.

There has been broad agreement on the need for a diversification of suppliers and new import routes. But divisions quickly emerge when the topic turns to specific projects, and critics suggest national and private interests threaten to eclipse the exigencies of the EU as a whole.

The fate of the Nabucco gas-pipeline project is arguably a case in point.

The project aims to bring some 30 billion cubic meters of gas annually from the Caspian region and Middle East, via Turkey, to the heart of Europe.

Representatives of leading energy suppliers and importers are gathering at separate conferences in Turkmenistan's capital, Ashgabat, and Bulgaria's capital, Sofia, to grapple with some of the political and economic challenges that could undermine the EU's diversification strategy. Pipeline projects that include Nabucco are on the agenda.

Eyes On Germany

Nabucco backers point out that Russia and Ukraine would be circumvented and have no involvement, and the countries hardest hit by January's gas cut-off would benefit from having the route travel through their territories.

But despite the newfound emphasis on alternative energy routes, which initially benefited Nabucco, the project appears to have been taken off the EU's list of priorities.

For those governments who most want to see Nabucco realized, their EU brethren pose the biggest obstacle, and many fingers are pointed squarely at Berlin.

"I have to say that the politics of the German government are in a very strong sense national politics, and of a kind that do not even cover the interests of all [German] energy companies," says Friedemann Mueller from the German Institute for International and Security Affairs (SWP). "[E]specially RWE has signaled a very strong interest in Nabucco, while the German government aligned itself with the position of the two big German importers of gas, E-On Ruhrgas and BASF Wintershall."

RWE, one of six shareholders in the Nabucco project, signed a memorandum of understanding on April 16 with Turkmenistan, a country that Nabucco organizers hopes to include as a supplier. (The other shareholders are Austria's OMV, Hungary's MOL, Bulgaria's Bulgargaz, Romania's Tranzgaz, and Turkey's Botas.)

Ruhrgas and BASF Wintershall are participating in another gas-pipeline project -- Nord Stream, a scheme the German government strongly backs. Nord Stream is due to be completed in 2011, with a parallel pipeline to be completed the following year. It is hoped that by 2012 Nord Stream will deliver some 55 bcm of gas from Russia along the Baltic seabed to Germany. From there, the pipeline should take some of that gas south to pipelines in the Czech Republic and Slovakia, while other pipelines would run west toward Britain.

Mueller is among critics who argue that Nord Stream is a less attractive option for the European Union than it is for Ruhrgas and BASF Wintershall.

"I don't believe [Nord Stream] to be in the interest of Europe; it in the interest of consumers in Germany," he says. "But it is very much reflecting the interests of these two companies."

Some EU members note that while Nord Stream would bring a huge amount of gas to Europe -- representing about 1/10 of EU consumption -- it would fail to address fully the challenge of diversification because the supplier is still Russia.

Hurry Up...

Federico Bordonaro, a senior analyst at the Italy-based energy analysis group, says there is a significant difference between the way Germany and other EU states -- especially former Soviet satellite states -- view cooperation with Russia.

"The problem really is that Germany has a different approach to Russia than, let's say, Poland or the Baltic States or the Czech Republic or Romania and Bulgaria," Bordonaro tells RFE/RL. "For Germany, Russia has become a very valuable commercial and energy partner, and Germany has found out that it could secure its access to the strategic resources, especially natural gas, through bilateral agreements with the Russians."

Bordonaro argues that Berlin -- but not only Berlin -- is simply avoiding a protracted EU debate in pursuit of Germany's own energy security.

"We can say that this is not very wise from a political and diplomatic point of view," Bordonaro says, "but because the European Union is absolutely too slow to take unanimous decisions, big countries like Germany or France and even Spain and Italy...have perceived that bilateral relations with the Russians were simply the best way to secure access to the strategic natural-gas resources."

Gerhard Schroeder, who championed Nord Stream when he was Germany's chancellor, is currently the board chairman for Nord Stream, a position given to him by Russia's Gazprom in late 2005.

SWP's Mueller says that while Chancellor Angela Merkel is not quite on the same cozy terms with Russian officials, her policies toward Russia and the Nord Stream project stray little from those of her predecessor.

"I don't see many differences [between Schroeder and Merkel] -- to the contrary, I see very much continuity in this policy," Mueller says. "Certainly, Chancellor Merkel is keeping more distance regarding the persons, to the president and prime minister of Russia. But that doesn't mean that she's not, in a very similar way, representing the interests of the companies -- and especially is favoring the Nord Stream pipeline -- while she does not support the Nabucco pipeline, which is held in low esteem by Russia."

...And Wait

In January, Merkel called on fellow EU governments to support Nord Stream despite warnings against Russian-backed projects. Nabucco was made an EU "priority" project in late January, but that status was short-lived.

In mid-March, EU leaders met after months of debate and agreed to spend 5 billion euros on energy- and rural-development projects. But Germany demanded a "sunset clause" be included in that program stipulating that any projects not started by the end of 2010 would be ineligible for funding.

Nabucco, slated to start construction in 2011, was officially removed from the EU priority list.

Merkel's government has argued that until Nabucco signs contracts with gas-supplying countries, the European Union should not fund the project.

At the very least, some within the German government have added, Nabucco should be funded privately.

Looking further ahead, all the uncertainty around Nabucco appears to have pushed it out of the spotlight as representatives prepare for another major energy conference, scheduled for Prague on May 8.

That event was originally intended to build on progress made at a Nabucco conference sponsored by the Hungarian government in January. But Nabucco is now just one of several projects that will be discussed at that so-called Southern Corridor conference.

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