Frequently Asked Questions

Nabucco is the new gas bridge from Asia to Europe. It will connect the world's richest gas regions - the Caspian region and the Middle East to the European consumer markets. The pipeline will link Turkey, to Baumgarten in Austria - one of the most important gas turntables in Central Europe - via Bulgaria, Romania and Hungary.

The demand for gas in Europe is expected to increase considerably in the upcoming two decades. Sufficient gas reserves are available around Europe to meet this future increase in demand for European gas - which is not unexpected. The biggest challenge, however, is how this gas can be best transported to consumers. At present sizeable enough capacity does not exist for transporting these gas volumes to European gas markets. Additionally, the only region with rich gas reserves, and which is not yet connected with the European markets via pipeline, is the Caspian Region and the Middle-East. Nabucco is therefore the answer to the challenge outlined above and consequently will open up a new supply route for Europe. Nabucco is also the most viable transportation route from the Caspian basin, both logistically and economically, making it more attractive than other alternatives being discussed.

No, NABUCCO Gas Pipeline International Ltd. (“NIC”) is a company which has been set up to develop, establish, construct and operate the Nabucco Gas Pipeline. The gas will be delivered by shippers, who will buy transportation capacities.

As domestic production of gas is decreasing dramatically all over Europe, in order to meet future demand, new infrastructure sources have to be established with the European gas markets. In this respect, the Caspian Region and Middle East with their vast gas reserves - - will play a crucial role both in terms of diversification of supply as well as security of supply for Europe. The opening up of a fourth main supply corridor is the only solution to meeting all of Europe's future gas demands. Consequently this route offers a wide range of supply sources for the Nabucco gas pipeline, receiving gas from the Caspian Region like Azerbaijan, Turkmenistan or the Kurdish region of Iraq.

The Nabucco project is the biggest pipeline project in europe, from a political and commercial perspective, but also from a technical perspective. In the base case, it is almost 4,000 km long and will cross five countries. In the Nabucco West scenario, a proposal for which has been submitted to the Shah Deniz Consortium in May 2012, the pipeline will be 1300 km long starting at the Bulgarian-Turkish border following the same route in the EU transit countries as in  the base case. To date, a large part of the groundwork has been carried out in preparation for the construction of the pipeline.
After the final supply-related decisions are taken, construction of the pipeline can be completed in 3-4 years. We aim to be ready in time to meet producers’ delivery schedules.

Nabucco will render transportation services to market participants and conclude transportation contracts with Shippers. These Shippers will book capacity with NIC, on a long or short-term ship-or-pay basis, for the transport of gas using the Nabucco Gas Pipeline. NIC will operate a one-stop-shop and collect payments from shippers. Long term means 15 to 20 years. Ship-or-pay means that the tariffs will have to be paid for reserved capacity on a firm basis irrespective of the factual use of the capacity day-by-day.
 

The Nabucco Shareholders are in negotiations. NIC will act as a pure Transmission System Operator (TSO). NIC will therefore not negotiate with either producers or consumers. It would be the responsibility of shippers to decide where to buy and sell the gas. The existence of the Nabucco Gas Pipeline will make such deals possible.

• To open a new gas supply corridor for Europe and for the countries involved in the Nabucco Gas Pipeline Project, delivering very cost-effective gas sources
• To raise the transit profile of the participating countries along the route
• To contribute to the security of supply for all partner countries, and also for Europe as a whole
• To connect the transmission systems of the Nabucco shareholders  with the European gas network

As an international company NIC will act according to European standards and the auquator principles of the banks. NIC promotes an active dialogue with employees, regional communities, governments, customers, shareholders, investors, interest-groups, the media, non-governmental organizations and the general public as a whole.
Underlying basis for the core values of Nabucco are the 10 principles of the United Nations Global Compact initiative, according to which businesses should:

• support and respect the protection of internationally proclaimed human rights,
• uphold
  • the freedom of association and the effective recognition of the right to collective bargaining, as well as,
  • the elimination of all forms of forced and compulsory labour,
  • the effective abolition of child labour, and
  • the elimination of discrimination in respect of employment and occupation,
• support a precautionary approach to environmental challenges,
• undertake initiatives to promote greater environmental responsibility,
• encourage the development and diffusion of environmentally friendly technologies, and
• work against corruption in all its forms, including extortion and bribery.

OMV Gas & Power (Austria),FGSZ* (Hungary), Transgaz (Romania), Bulgarian Energy Holding (Bulgaria) and Botas (Turkey).
*FGSZ is a wholly-owned subsidiary of MOL

Nabucco is open for further partners if they strengthen the project. This will be decided by the shareholders.
The Nabucco consortium has entered into negotiation with BayernGas with a view to the company joining as a seventh shareholder. The Nabucco Steering Committee is also in negotiations with other potential shareholders.

Nabucco is supported by an Intergovernmental Agreement that was signed with states in July 2009 and has since been ratified in all five transit countries. This treaty, valid for 50 years, grants transit rights in Austria, Hungary, Romania, Bulgaria and Turkey regardless of the involvement of any shareholder company in the consortium.

The estimate of the capital expenditure linked to the construction of the Nabucco gas pipeline stands at €7.9 billion.  This figure was the result of the Nabucco cost estimate in 2008 when the Oil price was on a record level which is a major cost trigger. In the meanwhile the Iranian feeder line was cancelled and the feeder line to Iraq was confirmed in 2010 which was not included in the original cost estimate.. In case  Nabucco-West would be choosen the investment would be considerably less.

The review by our experts is currently ongoing. We are not speculating about costs, we`ll communicate a final figure after the cost review has been finalized.
This final CAPEX figure is dependent on a number of cost variables most important are :

• The final route of the pipeline and any technical considerations due to terrain that will be confirmed once the detailed engineering has been completed. FEED for the Iraqi feederline is still ongoing.
• The volatility of steel prices
• The level of inflation
• The foreign exchange rates
• Financing costs

Costs and other specifications relating to Nabucco West are confidential, as the proposal is currently under review. However, costs of Nabucco West will be substantially lower due to the reduced length of the pipeline, along with other factors.

Yes. Nabucco works on the basis of an approved budget.

The actual cost of the project has been below planned costs and budgets so far.

In order to finance the Nabucco Gas Pipeline Project, NIC will raise funds from shareholders, international development banks, export credit agencies and the commercial banking market in accordance with internationally recognised social and environmental standards. 30% of the investment will be funded by the shareholders, 70% by lenders. NIC will try to obtain up to a third of the funding required from international financial institutions.The mandate letter with the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and IFC – a member of the World Bank group has been signed in Brussels in September.

The mandate letter formalises the framework within which the three International Financial Institutions (IFIs) will conduct their appraisal and due diligence of the Nabucco Gas Pipeline Project, and provides an indication of their potential amount of financing. It sets out the work that will be required until a final financing decision can be taken.

The financial involvement of the lenders EBRD, EIB and IFC will be up to 4 Billion EUR in total. The potential financing package will consist of up to EUR 2 billion from the EIB, up to EUR 1.2 billion from the EBRD (up to EUR 600 million for EBRD’s account and up to EUR 600 million to be syndicated to commercial banks) and up to around EUR 800 million from IFC (up to EUR 400 million for IFC’s account and up to EUR 400 million to be syndicated to commercial banks). The detailed amounts will be subject to negotiations.

The involvement of well-known international financial institutions (EBRD, EIB, IFC) guarantee the financing of the Nabucco Gas Pipeline Project.

The Intergovernmental Agreement was signed in Ankara on 13 July 2009 and ratified by all National Parliaments by March 2010. It marks an important milestone in the development of Nabucco as it is a political agreement between the governments of the Nabucco transit countries - Austria, Hungary, Romania, Bulgaria and Turkey, which harmonises the legal framework and grants stable and equal transport conditions for all partners and customers.

It is a bilateral agreement between the Nabucco companies and the ministries of each transit country establishing a harmonized legal regime for the entire route.

The PSA secures a stable and harmonised legal framework for the entire pipeline length

The three main elements are:

• The affirmation of the exemption of the EU gas directive granted by each country. This allows third parties to bid for up to 50% of the pipeline´s transport capacity on a long term basis.
• The protection of the project from discriminatory changes in law.
• The governments support legislative and administrative actions for the economic implementation

Together with the IGA, the PSA will be the primary contractual interface between the project companies and the host governments. Like the IGA, the duration of the PSA will be for 50 years.

These unique harmonized legal framework grants a predictable and transparent transit regime for the entire rout across all borders.

"Open Season" is the name of a tender procedure and contains two steps. In the first step, the offer is addressed to the shareholders and associated companies for an amount up to 15 bcm – 50 percent of Nabucco's maximum transport capacity. In the second step, Nabucco will offer the remaining 50 percent to external companies ("third party access"), offering them the same conditions and transparency. In this procedure all market participants will have the possibility of securing long-term contracts. The entire "Open Season" process will last around six months. The Open Season Process is expected to start after gas supply has been secured.

An Environmental and Social Impact Assessment is a study conducted ahead of the construction process in order to identify potential issues and enable any necessary mitigation procedures to be put into place. The scope of the ESIA encompasses geophysical, biological, environment and socio-economic factors along the route of the Nabucco Gas Pipeline Project. The assessment procedure will include specific surveys, as well as public and stakeholder consultation events.

The Nabucco project falls under the EU Environmental Impact Assessment Directive and Turkish EIA legislation. NABUCCO Gas Pipeline International GmbH executes a comprehensive Environmental and Social Impact Assessment (ESIA). The ESIA will be a key instrument in ensuring the successful execution of the Nabucco project.

Under EU law, each country is required to conduct an EIA for the section of the pipeline corridor that falls within their national boundaries. This also applies to Turkey as an applicant for EU membership.

The ESIA has been initiated in all 5 Nabucco countries and the Scoping stage is already successfully completed in all 5 countries. Currently the preparation of the ESIA documentation is under preparation. In some countries first ESIA permits have been obtained already. The ESIA permitting phase will be completed as soon as possible.

The results of the ESIA will enable the Nabucco team to put any necessary mitigation measures in place, before construction starts on the pipeline, in order to prevent, eliminate or minimise any disruption to either the environment or the local communities.

• The Project Support Agreements were signed by all transit countries in June 2011, thus finalising the legal framework for the pipeline.
• In Hungary, three out of the four environmental permits have been granted.
• Nabucco was granted national project status in Bulgaria and in Turkey in the last few months.
• The Front End Engineering of the entire pipeline route is 80% finalised.
• The German company Bayerngas is currently negotiating with the Nabucco consortium to become the 7th shareholder.
• On 1 October 2011, Nabucco Gas Pipeline International GmbH submitted a competitive proposal to the Shah Deniz II consortium for the transport of gas from Azerbaijan. Shareholder-Negotiations are ongoing.
• On 16th of May 2012, Nabucco Gas Pipeline International GmbH submitted a competitive proposal to the Shah Deniz II consortium for a Nabucco-West scenario.

Nabucco West is the name of a proposal submitted to the Shah Deniz Consortium by Nabucco Gas Pipeline International to transport gas from the borders of the European Union to the European markets.

Nabucco West will run from the Turkish-Bulgarian border to the vicinity of the gas hub at  Baumgarten near Vienna, Austria. The pipeline will pass through Bulgaria, Romania and Hungary before it reaches Austria. The route distances are as follows:
Bulgaria: 412 km
Romania: 469 km
Hungary: 384 km
Austria: 47km
The total length of the pipeline will be 1300 km.

Nabucco is supported by an Intergovernmental Agreement that was signed with states in July 2009 and has since been ratified in all five transit countries. This treaty, valid for 50 years, grants transit rights in Austria, Hungary, Romania, Bulgaria and Turkey. The feasibility of the base case is not affected by the Nabucco West proposal, and decisions on this issue will be taken by the shareholders of Nabucco depending on market demand and other factors.

The Shah Deniz Consortium has announced that it expects to make a final route selection ahead of mid-2013, and a decision for the Central European section in the course of June 2012.

After the final decision has been taken in 2013, construction will begin as soon as possible to meet producers’ delivery schedules.

These are details that cannot be disclosed for confidentiality reasons until the proposal has been considered and a decision taken.

The Nabucco pipeline means diversification of energy supply and increased energy security for European markets. At the end of the day, Nabucco means freedom of choice for European consumers.