November 23, 2011 / 2:12 PM / 6 years ago

UPDATE 1-Nabucco head confident funding can be settled

* Azerbaijan gas supply decision expected in 2011

* Nabucco to meet Shah Deniz officials in Vienna on Thursday

* First supplies scheduled to transport in 2017/2018 (Adds detail)

By Luiza and Ilie

BUCHAREST, Nov 23 (Reuters) - Financing for Europe’s planned Nabucco gas pipeline project can be settled and will not create a bottleneck, while a key decision on gas supplies from Azerbaijan is expected later this year, consortium chief Reinhard Mitschek said on Wednesday.

Undermined by spiralling cost estimates and delays, the project aiming to bring in up to 31 billion cubic metres of gas a year from the Caspian region, has long been regarded as the EU’s dream scheme for reducing energy dependence from Russia.

“I am confident that once we will have the gas supply and transportation contracts and ... with political support we expect financing will be settled and will not create a bottleneck,” Mitschek told a news conference in Bucharest.

He said institutions such as the European Investment Bank, the European Bank for Reconstruction and Development and World Bank financing arm IFC were willing to contribute some 4 billion euros overall, pending several conditions, including an environmental assessment which would be finalised next year.

Nabucco and a Russian-designed pipeline South Stream, as well as other pipeline projects, are all vying for Azeri gas from the Shah Deniz field to boost fuel supplies to southern Europe.

Earlier this month, Azerbaijan energy minister Natig Aliyev said Nabucco would carry gas from the Caspian region to Europe when local production rises to appropriate levels. “I am confident we can develop the project in time,” Mitschek said adding that his consortium will meet Shah Deniz officials in Vienna on Thursday to discuss transport via Nabucco.

The pipeline, which the European Commission has estimated will cost around 10 billion euros, is scheduled to transport the first supplies in 2017 or 2018.

“The start of the open season will depend on progress with gas suppliers. I expect a decision from Shah Deniz at year-end and if this happens ... then we can start the open season at the end of the first quarter of 2012.”

Since the inception of the Nabucco project, much has changed in the global gas market, including the commercial viability of unconventional gas from shale.

The European Commission has already said it was receptive to talks on combining pipelines competing to bring gas from Shah Deniz.

Nabucco’s shareholders are Austria’s OMV, Germany’s RWE , Hungary’s MOL, Turkey’s Botas, BEH of Bulgaria and Romania’s Transgaz. (Writing by Radu Marinas; editing by Keiron Henderson)

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