The Nabucco project gained some momentum in mid-July with the signing of an inter-governmental agreement between countries involved in the natural gas pipeline proposal. If completed, the pipeline would unlock reserves from the Caspian region and potentially the Middle East, thus providing the European gas market with sources of supply outside of Russia.
The purpose of the agreement, signed by representatives of the European Commission, Austria, Bulgaria, Romania and Turkey, was to outline a legal framework for transiting gas through the system, and to address other issues such as tariff levels and access to the pipeline network. The signing was hailed in some media circles as a blow to Russia's alternative pipeline proposal, the South Stream project, which would supply Europe with natural gas via a pipeline running under the Black Sea to Bulgaria.
But questions still remain about which producers will be in a position to supply enough gas to Nabucco in the longer term to make the ambitious project viable. For its part, Russia maintains that the South Stream project has a natural advantage over Nabucco, because it already has the gas to supply it. Moscow's proposal to construct a pipeline under the Black Sea is said to be costly, though.