Nabucco gas pipeline construction may cost 60% more than estimated

The estimated costs for building the Nabucco natural gas pipeline increased 58%, from 5 to 7.9 billion euro, mainly because of the growing price of steel, the consortium involved in the project announced. Referring to the natural gas resources to be exploited, the consortium announced that the negotiations with potential exporters will begin in June.

The 5 billion euro cost was calculated in a feasibility study put up in 2005. The price for crude oil doubled since then, leading to prices increase for all energy sources, including steel, Nabucco Gas Pipeline International manager Reinhard Mitschek explained.

One third of the Nabucco project costs will be supported by shareholders, while two thirds of the funds will be submitted by banks. The project requires some 2 million tons of steel, 200,000 pipeline segments and over 30 compensation stations.

Running for some 3,300 kilometers, the pipeline aims at transporting Caspian natural gas from Turkey through Bulgaria, Romania, Hungary and Austria. The project is part of the European efforts to diminish the gas dependence towards Russia.