Hungary's MOL confirms it may pull out of Nabucco pipeline project

26 April 2012 13:58  [Source: ICIS news]

LONDON (ICIS)--Hungary’s MOL will sell its stake in the EU-backed Nabucco gas pipeline project if necessary, following further communication with the consortium behind it, the oil, gas and petrochemical group said on Thursday.

MOL had made it clear to the consortium that it still had concerns about the potentially escalating costs of the project, unsustainable financing requirements, the possibility that the Azerbaijan-to-Austria pipeline would not be able to source enough gas, and inadequate project structure and management, it added.

The consortium, Nabucco International Company, had also been informed that MOL would not be providing it with any more financing, MOL said.

On 24 April, the consortium and the European Commission said they had received no indication from MOL that it was set to withdraw from the infrastructure venture, following comments in Brussels made by Hungary's Prime Minister Viktor Orban the previous day, in which he stated that Nabucco was “in trouble”, that MOL was leaving the project and that Hungary was supportive of the rival Russian South Stream initiative.

Subsequently, the consortium pointed out that if MOL did leave the project, Nabucco could still be laid across Hungarian territory thanks to a ratified July 2009 intergovernmental agreement, valid for 50 years, between countries that have previously expressed their support for the “Asia to Europe gas bridge”, including Hungary.

The consortium said it remained confident that it could replace MOL with a new consortium member.

Germany’s Bayerngas has said it is considering taking a stake in Nabucco.

The cost of Nabucco has been estimated by analysts at over $12bn (€9.1bn), but the consortium is considering cutting the required expenditure by downsizing the project.

This would involve building a pipeline only as far as the Turkish border, and relying on other pipeline projects to traverse the remaining distance to Azerbaijan.

Apart from MOL, the current Nabucco consortium members are Germany’s RWE, Austria’s OMV, Bulgaria’s Bulgargaz, Romania’s Transgaz and Turkey’s Boru Hatlari ile Petrol Tasima.

($1 = €0.76)

By: Will Conroy
+44 20 8652 3214

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