Seeking Alpha
, OilPrice (28 clicks)
Commodities, investment advisor, oil & gas, long only
Profile| Send Message|
( followers)  

The European Commission added to its economic stimulus program with the largest-ever package of grants to energy infrastructure, including support for the Nabucco pipeline project that will help Europe diversify its sources of natural gas.

The package of 2.3 billion euros ($3.1 billion) for 43 projects will attract 22 billion euros ($30 billion) of private sector energy investment, largely for pipelines and electricity interconnectors.

“The problem is that, in today's economic climate, such projects risk to be delayed,” Guenther Oettinger, the European commissioner responsible for energy, said in statement. “This is a moment where Europe can play an important role in keeping these projects on track.”

One of the biggest grants, 200 million euros ($271 million), will go to help fund the Nabucco pipeline project to bring gas from the Caspian Sea via Bulgaria and Romania to European Union countries.

The 2,000-mile pipeline, with an estimated total cost of 8 billion euros ($10.8 billion), would help reduce the European Union’s reliance on natural gas from Russia, which is vulnerable to interruption amid the frequent disputes between Russia and Ukraine. A standoff last winter between Russia and Ukraine, which Russian gas has to transit to reach the EU, cut off gas supplies to Europe for weeks.

“Investing in key infrastructure will not only give a push to the economy and employment, but it will also help ensuring that citizens’ homes will have heating and electricity, even in the event of supply disruptions,” commission president José Manuel Barroso said in a statement. “We have learnt the lessons of the recent gas crisis which is one of the reasons why we decided to allocate major financial assistance to new energy infrastructure projects.”

The Nabucco project has made intermittent progress and could still collapse. Commission officials expressed the hope that the grant could help push things forward.

The grants totaled 910 million euros ($1.2 billion) for 12 electricity interconnection projects and 1.4 billion euros ($1.9 billion) for 31 gas pipeline projects. The money will be granted to project developers over the next 18 months.

The projects were selected to better interconnect all EU member states and to reduce the isolation of remoter parts, such as the three Baltic States, Ireland and Malta, the commission said.

Last year, the commission offered 1.5 billion euros ($2 billion) in grants for 15 projects for offshore wind farms and carbon capture and storage projects.

Disclosure: No positions

Source: EU Offers $3.1B for Energy Infrastructure Projects