Oil Report

INTERVIEW-RWE stands by gas alternatives Nabucco, LNG

* RWE: Nabucco problems manageable, sees support from Turkey

* LNG terminal at Wilhelmshaven remains in sight

* Regulator must help with rules for connections

BERLIN, Jan 22 (Reuters) - The head of RWE's RWE Supply & Trading RWEG.DE unit on Thursday backed the six-party Nabucco pipeline consortium, as the Russia-Ukraine gas transit row highlighted the need for alternative routes.

RWE is a member of the consortium which is led by Austria's OMV OMVV.VI and aims to bring Caspi region gas to Europe.

“We are convinced that Nabucco will become reality. There are problems, but these can be overcome,” the unit’s CEO Peter Terium said in an interview with Reuters.

Partner country Turkey this week linked backing the project to support in its accession talks with the European Union (EU) and demanded to keep 15 percent of the gas flows through its country.

Terium pushed aside concern in the EU about Turkey’s demands, which add to the need to secure gas volumes at the origin to feed the pipeline, whose costs RWE put at 8 billion euros ($10.38 billion).

“I have the impression that Turkey’s government is fully behind the project,” he said.

RWE with the help of Nabucco gas aims to sell more gas in central and southeast Europe and to gas-fired power stations.

Nabucco is a key plank in EU plans to lessen dependence on Russia gas. Transit countries must agree on the operations, investment plans must be concluded and the EU must agree to certain preferential rights for consortium members.

The RWE group, which unlike German competitors E.ON Ruhrgas EONGn.DE and Wingas BASF.DE was late in building up a gas transport and transmission infrastructure, also sees itself vindicated in its plans for liquefied natural gas (LNG).

“The gas crisis showed that we must not rely on one supplier only. We need additional sources,” Terium said.

He upheld previously announced plans by RWE to build an LNG gas landing terminal at Wilhelmshaven on the North Sea coast for a likely start in 2012.

This will use a novel and cheap way to unload regasified gas into onshore grids, avoiding costly onshore installations.

But there must be agreement with the authorities on how the port’s link to the German high-pressure pipeline grid could be realised.


Elsewhere, if RWE’s freshly announced takeover plan of Dutch peer Essent goes through, the group’s trading unit’s reach will be boosted in European energy wholesale markets, Terium said.

Joint annual trading volumes in the power market will total 1,425 terawatt hours (TWh), of which Essent will bring 225 TWh.

Gas trading will expand to 103 billion cubic metres (bcm) as Essent adds 13 bcm to RWE’s 90.

Coal trading will almost double, with RWE bringing 130 million tonnes/yr into the bargain and Essent 100 million. ($1=.7706 Euro)

Editing by Sharon Lindores