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European security issues

18 - Diversification of gas-supply routes to Europe

Grade: C-
Unity 2/5
Resources 3/5
Outcome 2/10
Total 7/20
Scorecard 2012: B- (12/20)

The cancellation of the Nabucco pipeline was a setback for the EU’s diversification policy because the alternative TAP pipeline has a much lower volume.

The Nabucco pipeline, the key project in the EU’s Southern Gas Corridor and diversification policy, was finally cancelled in July by the Azerbaijan-led consortium that owns the Shaz Deniz 2 gas field, the main supplier for both pipelines. Instead, it chose the much shorter Trans Adriatic Pipeline (TAP), which is led by BP and has a lower capacity than Nabucco. TAP will use an existing pipeline infrastructure to bring Caspian gas to the EU through Turkey. As a result, Turkey and Azerbaijan will play a much more important role for the infrastructure than they would have with Nabucco. Italy will now be the final destination of the pipeline instead of Austria.

Member states were divided about these pipeline projects. Italy lobbied against Nabucco and supported the TAP pipeline, and saw the decision to cancel Nabucco as a diplomatic victory. At the same time, ENI is still one of the main stakeholders in the competing Gazprom-led South Stream project, which has even greater capacity than Nabucco. The South Stream project progressed in 2013 as the consortium signed agreements with all of the transit countries. The involvement in South Stream of other European energy companies such as Germany’s Wintershall and France’s EdF makes the project more likely to become a reality, even with its high costs. Energy Commissioner Günther Oettinger criticised Austria, Bulgaria, Croatia, Germany, Greece, Hungary, Italy and Slovenia among others for signing a bilateral agreements with Russia as part of the South Stream project.

A further development that undermined European unity was the German government’s support of Gazprom’s attempt to exempt the OPAL pipeline, which links Nord Stream with the European gas network system, from the Third Energy Package. This would undermine competition. Because of the European Commission’s unbundling policy, the OPAL pipeline is only operating at 50 percent capacity. Meanwhile, Europe continued to resist the exploitation of shale gas: several Central and Eastern European member states such as Bulgaria limited or banned fracking.