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Russia’s South Stream may have Defeated its Nabucco Rival

The Nabucco Pipeline was supposed to give Europe an alternative source of natural gas and free eastern European members from the oppression of Russia; yet Russia’s South Stream Pipeline, which follows the same route, may result in the abandonment of Nabucco. Instead the Azerbaijan and its partner, BP, may decide to build the Trans Adriatic Pipeline (TAP) to supply natural gas to southern Europe.

The Nabucco Pipeline was originally planned to be 3,900km long, stretching from Azerbaijan, across Turkey, and then up through the Balkans, and then onto Austria. This was then reduced to a 1,300km pipeline after it was decided to link it to an existing pipe in Turkey.

The TAP will only be 800km long, as it only stretches from Azerbaijan, across Turkey and Greece, and then under the sea to southern Italy.

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Nabucco is expected to cost $8 billion, and TAP will be $500 million less, although the Nabucco will allow the natural gas access to more markets.

Eastern Europe will benefit greatly from Nabucco as it will offer an alternative to Russian gas that is often supplied at high costs; but Italy will benefit from TAP as it looks for alternative supplies to its politically unstable North African sources.

Nabucco will help poor eastern bloc economies such as Bulgaria and Romania with the infrastructure investments that will be made in the countries; yet TAP will provide those same investment benefits to Greece and Italy whose economies (especially Greece’s) have been dragging the EU into recession. Germany will be especially happy if Greece receives boosts to its economy enough to no longer need future bailouts. There is also the fact that Russia’s South Stream pipe will bring the same economic benefits as Nabucco, although without the relief from reliance on Russian gas.

The decision over which pipeline to build will be made in June; although both offer good, and similar cases.

By. Joao Peixe of Oilprice.com



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