Thursday, July 17, 2008

Steel Price Is Latest Setback for European Pipeline

Nabucco, the European Union’s natural gas pipeline project, intended to reduce the bloc’s dependence on Russian natural gas, has been dealt another setback — and this one could hit European consumers in the wallet.

The companies involved in the project, already plagued by delays in construction and financing, said Tuesday that its cost would grow by nearly 60 percent because of higher steel prices.

The participating companies said they were concerned that the new estimated cost of almost 8 billion euros, or $12.4 billion — 60 percent more than initially planned — will be passed on to consumers once the pipeline is completed in 2014.

Reinhard Mitschek, managing director of Nabucco Gas Pipeline International, which is overseeing the infrastructure project, said sharp increases in crude oil prices and commodities could not have been anticipated in the original price of 5 billion euros established by a feasibility study in 2005.

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