09 May 2011 13:16 [Source: ICIS news]
LONDON (ICIS)--A two-year delay to the start of commercial flows of natural gas from the Nabucco pipeline has raised serious doubts about the economic viability of the project, an investment bank said on Monday.
Nabucco Gas Pipeline International’s decision to push back the planned start of construction of its “new gas bridge from Asia to ?xml:namespace>
In a note to investors, the bank pointed out there is still “no information on when a final investment decision is expected to be made (it was previously expected in 2011)” and that there were real anxieties about substantial cost overruns.
“The project company has not yet provided a new cost estimate,” Wood & Company said.
The bank noted that although Nabucco Gas had described news reports that the pipeline cost might turn out to be €12bn-€15bn ($17.1bn-$21.4bn), in contrast to the official estimate of €7.9bn.
“An earlier study by BP has already put the realistic cost materially higher, at around €14bn,” Wood & Company said.
“The rising costs (although no updated official estimate exists at the moment) are also bad news, as we have had serious doubts about the economics of the pipeline from the very beginning,” the bank said.
Critics of Nabucco have included Russian Prime Minister Vladimir Putin, who in April said the project is futile given that Russia’s rival pipeline, South Stream, which will transport gas from the Caspian region to Austria, was set to come on line with ample new capacity in 2015.
However, Nabucco Gas managing director Reinhard Mitschek said he remained confident that Nabucco was making good progress as a viable project, which the European Commission viewed as vital to reduce
The delays are simply the result of the need to align the project’s timeline with those of potential gas suppliers, he said.
“Nabucco’s progress has been positive so far, with the progress of the environmental and social impact assessment and concrete steps for procurement and other important work-streams,” he said in a statement.
Under the present plans, the Nabucco pipeline would carry 31bn cubic metres of natural gas every year from the Caspian region and the Middle East to the Baumgarten hub in
Nabucco Gas intends to secure up to one-third of that from an expansion of
($1 = €0.70)
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