US tells Europe to stop dithering over pipeline

· £3bn project would cut dependence on Gazprom
· Follow your wallet, urges official

The Bush administration yesterday urged the EU to stop dithering over the building of a $6bn (£3bn) gas pipeline from the Caspian basin to central Europe and reduce its growing dependence on Russia's Gazprom.

"Follow your wallet," Matthew Bryza, US deputy assistant secretary of state, said, arguing that the troubled Nabucco project made sound commercial sense and would cut Europe's dependence on Gazprom by up to a quarter.

Bryza's outspoken comments came after talks with senior EU officials, including energy commissioner Andris Piebalgs, and took sideswipes at the "gigantic rents" [excessive prices] Gazprom is charging Europe for gas. They underline the growing geo-political importance of gas.

"Helping Europe diversify its gas supplies has become extremely urgent," said Bryza, adding that US backing for Nabucco was in the country's national interests even though no American companies are involved.

This week's controversy in Britain over the huge profits made by British Gas at a time when householders are having to spend an increasingly large proportion of their income on energy also highlight the sensitivity of the issue for politicians across Europe.

The 2,050-mile (3,300km) Nabucco pipeline, on which construction is due to start in 2009, is supported by six European companies, including new partner RWE of Germany, and is seeking a seventh, possibly France's Total or GDF. The European commission approved rules for its construction this month.

Nabucco would bring gas from US ally Azerbaijan, Turkmenistan and possibly Kazakhstan via Turkey to Romania, Bulgaria, Hungary, Austria and perhaps Germany. It could supply 31bn cubic metres of gas a year from 2012-13. It could also supply gas from western Iraq, said Bryza. With a Turkey/Greece/Italy pipeline, it could provide up to 44bn cubic metres of cheap gas or a quarter of Gazprom's current 160bn cubic metres of supply to the EU. Gazprom supplies a quarter of all Europe's gas but this could rise to more than a half.

Bryza said Gazprom could purchase gas for as little as $100 for 1,000 cubic metres in Central Asia and sell it for $300 in Europe, with unsavoury, shadowy middle-men close to organised crime enriching themselves in the process.

"We want to help Gazprom to move from a monopoly towards more market-based behaviour," he said. "We want it to be reliable and produce more gas at home in a more competitive domestic market rather than buying up as much infrastructure here in Europe or the cheapest possible gas it can find in Central Asia."

Bryza said a Gazprom-sponsored alternative to Nabucco, called South Stream and bringing gas under the Black Sea through Serbia to Europe, would cost anything up to $30bn and be less efficient and costlier.

He claimed that the Azeris and the Iraqis, once they had approved a new hydrocarbons law, could fill the Nabucco pipepine despite analysts' fears that there will not be enough gas available. Eventually, with a change of policy towards nuclear enrichment, Iran, the world's second-largest gas producer, could also become a supplier.

"I can't believe the stories that are running around Europe that there's no gas and Nabucco will be too expensive. These are ridiculous arguments based on non-truths," he declared. "It will be built, I'm convinced, because it makes commercial sense and will be more efficient and cheaper than other alternatives."

Bryza insisted that US backing for Nabucco was in the country's national interests even though no American companies are involved. "Helping Europe diversify its gas supplies has become extremely urgent."