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Energy: Nabucco Pipeline

Volume 710: debated on Thursday 7 May 2009


Asked By

My Lords, the Government strongly support the development of the southern corridor, which would bring gas from the Caspian, via Turkey, into Europe. This would increase UK and EU energy security by diversifying both sources and routes of gas supply. The Nabucco gas pipeline has the potential to form a key part of the southern corridor and, as such, it has the Government’s strong support.

My Lords, I thank the Minister very much for his very positive Answer. The European Parliament voted yesterday to designate €5 billion to environmental projects. Some €200 million will go to the Nabucco pipeline, importing gas from the Caspian, bypassing Russia. Given that in 2005 we became a net gas importer and by 2006 we had a net deficit in oil, will the Government be supporting this European Parliament proposal in Council?

My Lords, the Government have not reached a position on that yet but, as the noble Baroness will have interpreted from my opening statement, we are very much in favour of the Nabucco development and therefore welcome the fact that the European Parliament has commented on it favourably. We understand that in fact there is an element of underspend in aspects of the European budget, which could effectively be deployed to this immensely worthwhile and important project.

My Lords, will the Minister expand a little on what the Government mean by “strongly support”? Are we taking action with other member Governments in the European Union to ensure that this project is carried through to fulfilment, or does it just amount to a tick in an official’s ministerial comments box without the Government doing anything to build an active coalition in the EU to make sure that the pipeline goes ahead?

My Lords, the Government are doing a great deal more than an active tick. The noble Lord will appreciate that some delicate negotiations are to take place among countries which supply the gas and through which the pipeline will go. I have only to mention that Turkey, Armenia and Azerbaijan are all involved to indicate that this is not a straightforward exercise, as if any pipeline crossing a number of countries would be straightforward. Therefore, there is considerable Foreign Office activity with the European Union to ensure that we get effective action. Of course, the pipeline will be a commercial project and the resources will come from commercial companies, but the House will be reassured to hear that at least one British oil company is interested in investing in the pipeline.

My Lords, does the Minister not agree that in March the European Council earmarked the €200 million that has now been approved by the European Parliament? Does he not also agree that it is likely that the negotiations would be greatly facilitated if the energy chapter in Turkey’s accession negotiations were opened and Turkey were to become a wholehearted supporter of the Nabucco project? The situation is not helped at the moment by the European Union’s foot-dragging on that chapter in the accession negotiations.

My Lords, the noble Lord raises the interesting issue of the relationship of Turkey to the European Union and the several significant hurdles that need to be overcome if Turkey is to join the European Community. These are challenging issues. However, there is no doubt that the pipeline will flow through Turkey, and inevitably the Turks are looking on this as an indication of the extent to which they can contribute to the European Union’s economic welfare and, through that, strengthen their position as regards joining. However, the noble Lord will recognise that Turkey does not meet all the tests that will be applied to it before it is able to join the European Union.

My Lords, is the Minister aware that the problem is not so much support from European Union members for the project, which has been very vocal in recent times, as finding enough gas to fill the pipeline to make it even remotely viable? That, of course, depends on Russian willingness to see an under-Caspian pipeline from Turkmenistan, and that in turn depends on the attitude of the President of Turkmenistan and the President of Azerbaijan, President Aliyev. All those are highly uncertain prospects, which accounts for the fact that the project keeps slipping down the priority agenda. From our own point of view, given that we are totally, heavily and increasingly dependent on gas, thanks to government dithering over nuclear, in the next 10 years, would it not be much wiser to develop our links with Norway, which has unlimited gas to supply to us, and to develop our own storage systems, import more LNG and fill this dangerous gap which has arisen as a result of the Government’s dismal and ineffective energy policies?

My Lords, the noble Lord has given no credence at all to the extent to which we have negotiated with Norway about the supply of gas and the opening of fresh facilities. Nor has he indicated the full extent of the gas supplies that could come from the Caspian Sea: as much as 10 per cent of European needs. It is therefore important that we give considerable support to this project, not least because, as will be recognised after the anxieties last year in the Russian-Ukrainian gas dispute, it is important that we develop other sources. Those are not to be underestimated in their potential.

My Lords, does the noble Lord recognise that there are at least three and possibly five taps on which unfriendly presidential hands may be laid in the Nabucco pipeline whereas we are assured of the friendship of our friend and neighbour Norway? Would it not be much better to proceed rapidly with expanding our resources from there than from elsewhere?

My Lords, Norway is of course a good deal more secure as a supplier but Norway is also well aware of its bargaining position. The idea that we should turn down efforts to develop a pipeline from another gas source would fly in the face of intelligent behaviour by the Government, which is to maximise the sources of gas supply to this country.

My Lords, will the Minister confirm that we can do both, and continue to support Azerbaijan and people in the Caspian region? I think that the UK is the largest investor in Azerbaijan, and there is also that huge pipeline run by BP, which is a British asset. On the basis of security of supply, it is great to have Norway; but it is also very important not to write off the huge resources in the Caspian and to invest over there too.

My Lords, I am grateful to the noble Baroness, and I would emphasise one other point. Anxieties may be expressed about the tensions that exist between countries on the line of this pipeline, but economic interests often reconcile such tensions. For more than half a century, through thick and thin, through the Cold War and even close to the heating up of the Cold War, gas supplies from Russia have remained constant. So we should not exaggerate the extent to which political difficulties might interfere with supplies.