Finally signed by Turkey, Bulgaria, Romania, Hungary and Austria on July 11 after first being mooted in 2002, the Nabucco pipeline project backed by the EU and US and designed to carry Caspian gas to EU markets bypassing Russia might cost less than its projected €7.9 billion ($11 billion) due to falling steel prices.
Previously when prices were high, the Nabucco consortium hiked the estimated cost of the 3,300 kilometer-long pipe to be used in the Nabucco project, which is expected to face competition from Russia's OAO Gazprom.
In autumn this year, the budget of the Nabucco pipeline project may be revised lower, following a detailed physical study of the projected pipeline. Steel orders are expected to be placed by early 2010, construction is anticipated to start in 2011 and gas to flow in 2014. The project will allow gas to flow into Turkey from three of four possible competing entry points - Georgia, Iran, Iraq and Syria. The first step of the project is for gas from Azerbaijan, Egypt and Iraq. Capacity buildup is targeted to continue up to 2018 and 2019, allowing the possibility of Iranian and Russian gas in the pipeline in the future.
The European Investment Bank (EIB) has recently signaled that it could finance up to 25 percent of the project once the agreement in question is signed. All five countries in question are expected by the end of June to sign an intergovernmental agreement, as a necessary political green light before any financial commitments can be made.
The Nabucco consortium, namely Nabucco Gas Pipeline International GmbH, includes Austria's OMV, Bulgaria's Bulgargaz EAD, Turkey's Botas, Germany's RWE, Hungary's MOL Nyrt and Romania's Transgaz SA, all with equal stakes.
The consortium already received 16 non-binding bids before the start of the open season capacity bidding. It is expected to see a rise in the number of bids made in tenders from companies, especially suppliers from Central Asia and the Middle East, to buy up the capacity of the pipeline for consumers.