The cost of the Nabucco pipeline, which will bring natural gas from Caspian to Western Europe, is expected to rise to €7.9 billion ($12.3 billion) from the previous estimate of €4.6 billion ($7.1 billion), the pipeline consortium said on Thursday. In any case, the competitiveness and economics of the project would not be affected moreover the profitability of the project would increase due to high energy prices, Austrian-based Nabucco Gas Pipeline International Company's managing director Reinhard Mitschek said in a written statement.
Mitschek said the previous figure had been estimated after a feasibility study completed in 2005. "Since then, crude oil prices have more than doubled, which consequently has also led to higher prices for all primary energy sources, including prices for steel," he added.
Steel companies were also capitalizing on the high demand for a large number of major infrastructure projects, Mitschek also said. The project requires two million tons of steel, 200,000 pipes and more than 30 compressor units.
The rising costs and uncertainties over supply sources were seen as the most important challenges in the project. The project's previous cost, with a planned maximum capacity of 31 billion cubic meters per year, was estimated to cost around $4.6 billion ($7.1 billion).
The Nabucco project is a planned 3,300 kilometers natural gas pipeline that will carry gas from
Mitschek said the competitiveness and economics of the project would not be affected because high energy prices in turn meant that Nabucco was needed and that its transport earnings would be highly profitable.
The pipeline, which will be one-third financed by the owners, and two-thirds by banks, is meant to diversify and lessen
The statement also said the group would start sounding out potential shippers from mid-June in a so-called open season process.
The project is being developed by the Nabucco Gas Pipeline International GmbH, established in 2004 in