Nabucco Group Scraps Plan For Iranian Gas Supply

European energy companies have shelved a plan to source gas from Iran to Europe via the European Union-backed Nabucco gas pipeline given Iran's political situation, the Nabucco consortium said Monday.

In line with previous statements on Iran, the consortium said it has decided to go ahead with the construction of two smaller supply pipes from Georgia and Iraq to the Turkish Nabucco pipeline starting point, but that the plan for a third from Iran has been cancelled for the time being.

The consortium behind the estimated EUR7.9 billion Nabucco pipeline comprises Austria's OMV AG (OMV.VI), Romania's Transgaz, Bulgaria's Bulgargaz, Hungary's MOL Nyrt. (MOL.BU) and Germany's RWE AG (RWE.XE).

"Nabucco is not planning an Iranian feeder line any more because Nabucco is acting in full accordance with international laws and regulations," consortium spokesman Christian Dolezal said in a written statement, adding: "We cannot comment on possible future developments."

Starting in 2014, the planned 3,000-kilometer Nabucco pipeline is set to carry up to 31 billion cubic meters of natural gas a year from Turkey to Western Europe through Romania, Hungary, Bulgaria and Austria. The feeder lines are needed to bring supply from gas producers to the pipe.

"The shareholders have agreed on a modification of the feeder line concept," the consortium said.

"Two feeder lines were confirmed and the respective engineering works were ordered but due to the current political situation, Nabucco Gas Pipeline International is not planning a third one to the Turkish-Iranian border so far," it said.

Iran has caused international alarm and condemnation with its uranium enriching program, which it says is for domestic energy production purposes, but is feared will lead to the development of a nuclear bomb. To force Iran to halt the program, the U.S. and EU have sanctioned international relations with Iran.

-By Flemming E. Hansen, Dow Jones Newswires; [phone]; [e-mail]