Mol mulls jumping ship to Nabucco rival SEEP

By bne IntelliNews May 15, 2012

Tim Gosling in Prague -

Just a couple of weeks after it hammered another nail into Nabucco's coffin by announcing it's ready to unload its stake in the grand European gas pipeline project, Hungarian energy firm Mol is looking at a cut price entry into rival southern energy corridor project South East European Pipeline (SEEP), according to reports on May 14.

Although Mol is still a partner in Nabucco, the company rejected the 2012 financial plan of project company NIC in April, expressing frustration with the pipeline's continued failure to secure the gas needed from the Caspian and Central Asia to fill its planned 31bn cubic metre capacity. Hungarian daily Nepszabadsag reported on May 14 that the company is now mulling a plan that would see it join SEEP, and use Hungary's existing pipeline network to fulfill its role in pumping Azeri gas to Central and Southern Europe.

The news comes as further doubt is poured on the original Nabucco plan - to run a pipeline from Austria to the Caspian - by reports that Germany's RWE is once more reconsidering its role in the project. Meanwhile, SEEP is in direct competition with the Nabucco back-up plan, a more modest project dubbed Nabucco West that would run from Austria to the Turkish border where it would link up with the planned Trans-Anatolian Pipeline (Tanap).

Mol, therefore, could theoretically end up straddling two projects going head to head for their very survival, with the right to carry Azeri gas into Europe the likely cornerstone for both SEEP and Nabucco West.

The consortium developing the giant Shah Deniz field in Azerbaijan - also led by BP - is due to decide between SEEP and Nabucco West for the northern route into Western Europe in June. The two projects are due to submit their final pitches on May 16. The winner would then face a play off against the winner of a competition for a southern route.

Meanwhile, in the face of wilting confidence, other members of the Nabucco consortium have been coming out to talk up the pipeline. On May 11 it was the turn of Austria's OMV. Hans-Peter Floren, head of the company's gas business, claimed at the company's AGM that the project could yet start construction by 2015, reports Bloomberg. "Should the owners of the BP Plc-led Shah Deniz field in Azerbaijan make a decision on whom to award its gas next year, construction could start in 2015 and be completed in 2018," the official said. He also reiterated the possible plan for Nabucco West.

OMV CEO Gerhard Roiss claimed in April that Nabucco is "more important than ever," as it's needed to transport gas from OMV's joint project with Exxon Mobil on the Black Sea. "It's important to have a pipeline in this region," he insisted.

No one denies that of course - the fight for the southern energy corridor has been going on for years - but the question of which pipeline will finally make it appears no nearer an answer. Nabucco's retreat from the original grand plan - which was driven by Brussels' urge to reduce reliance on gas routed from or through Russia - leaves Russia's South Stream as the lone mega-pipeline scheme.

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