The Nabucco Pipeline will bring natural gas from the Caspian region, Middle East and Egypt to Central and Western European gas markets via Eastern Europe, reducing dependence on gas from Russia.

The pipeline will total approximately 3,300 km in length starting at the Turkish border of either Georgia or Iran, and lead to Baumgarten in Austria. Gas will then be further transported to Central and Western Europe through Austria.

Capacity of the €7.9 billion ($US11.26 billion) pipeline will reach a maximum of 31 billion cubic metres per annum.

Front-end engineering and design (FEED) contracts for the project were awarded in May 2009 to five local engineering companies in Austria, Bulgaria, Hungary, Romania and Turkey, for work on the countries’ respective pipeline sections.

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In 2005, Nabucco Pipeline International identified that only 42 per cent of gas consumption in the European Union (EU) was covered by indigenous production, leaving 58 per cent that was imported, mostly from Norway, Algeria and Russia. Market studies have indicated that gas demand will increase in the future. Combined with a decline of domestic production, the EU is forecasted to require up to 80 per cent of gas consumption to be imported.

Nabucco Pipeline International is directly owned by the Nabucco partners, which are Austria’s OMV Gas & Power, Bulgarian Energy Holding, Germany’s RWE, MOL Hungarian Oil and Gas, Romania’s Transgaz, and Turkey’s Botas.

In July 2009, transit countries for the Nabucco Gas Pipeline project signed an Intergovernmental Agreement in Ankara, Turkey, to allow the project to pass through their territory.

Nabucco Pipeline International Managing Director Reinhard Mitschek said “The completion of the Intergovernmental Agreement represents a significant breakthrough in the realisation of this project. The pipeline now has a stable legal basis, and can guarantee gas transit under equal and transparent conditions for all customers.”

The agreement ensures equal legal conditions for the transport of gas throughout the pipeline system, and sets out a methodology for transport tariff and network access.

Nabucco Pipeline International has said that the next steps in taking the project forward will include detailed technical planning, as well as social and environmental impact assessments.