Tim Gosling in Prague -

A week after bestowing on the Russian gas pipeline South Stream the status of "strategic" project, Hungarian Prime Minister Viktor Orban drove another nail into the coffin of the EU's rival pipeline Nabucco, describing that project as "in trouble" and claiming the Hungarian state-controlled energy firm Mol would pull out of it.

"I'm not an expert on the details, but what I have seen is that even the Hungarian company Mol is leaving the whole project," Orban told reporters in Brussels, according to Bloomberg. The PM, who was in feisty mood as he arrived to discuss the continuing battle between the EU and Budapest over his government's "unorthodox" policies, summed it up by frankly declaring "Nabucco is in trouble."

Although it neglected to confirm whether or not it remains part of the Nabucco struggle, Mol said in a statement that there are "many uncertainties around the Nabucco project that would be hard to ignore." While Mol is committed to the diversification of the region's energy supplies, it owes its "shareholders the highest possible economic justification," it added.

The company also expressed its concern that the source of gas to fill Nabucco and the project's financing are both uncertain, and that it has experienced "a continuous increase regarding the costs of the realisation of the project, while it is still unclear how much the final cost will be."

Nabucco spokesman Christian Dolezal said by email: "The Hungarian shareholder is the Mol subsidiary FGSZ and we have so far no indication that this will change."

The Nabucco pipeline, part of Brussels' grand scheme to reduce dependence on Russian gas by tapping directly into supplies in the Caucasus and Central Asia via a pipeline linking them to Austria, is a joint venture between some of CEE's largest energy groups, with Mol joined by RWE, OMV, Bulgargaz, Transgaz and Botas in the project.

However, Nabucco has consistently failed to secure the gas needed to feed the pipeline. Crucial would have been gas from the second stage of Azerbaijan's Shah Deniz gasfield, but that gas now looks as though it could go through a new joint Azerbaijan-Turkey pipeline. In an attempt to salvage something from the debacle, Nabucco Managing Director Reinhard Mitschek said in March that the pipeline could be scaled down, linking into Turkey's planned Trans-Anatolia Pipeline (Tanap) at the EU's southern border, instead of building all the way to Azerbaijan, or beyond. A pullout by Mol would likely pull the rug out from under even that compromise.

By way of contrast, Russia - which insists it will plough ahead with building the rival South Stream pipeline - has enjoyed great success in signing up individual EU states to support its project. Orban met Gazprom CEO Alexei Miller in Budapest on April 17, and the pair stressed the importance of the project, which "meets the strategic interests" of both countries, the Russian company said in a statement.

Having plunged the knife in, Orban called Nabucco "an important issue because it's related to the energy independence of the country," adding that his "goal is that in three years Hungary could and should say that we are not dependent" on one single country for energy. The Hungarian government, which is Mol's biggest shareholder with a stake of 24.6%, supports a pipeline with Slovakia and negotiations on a link with Croatia are under way, Orban said, adding that "we would like to find a way somehow to the Italians."