The Russian dominance of the European Union (EU)’s natural gas supplies has put the independence ofthe EU at risk. This paper presents an evaluation of the Nabucco gas pipeline project – considered bysome to be the most economical link to new natural gas sources – to determine whether it would help theEU to diversify its gas supplies in a cost-effective way, thus improving its energy supply security in futureyears. Furthermore, an introduction to the Nabucco Open Season Capacity Allocation Process is given.Applying empirical methods and competitive pipeline benchmarking analysis, three hypotheses related tothe Nabucco natural experiment are evaluated: while hypothesis (1) focuses on the strength of demand forthe Nabucco pipeline transportation capacities, hypotheses (2) and (3) examine fair usage rights andoverall cost effectiveness of this project. Empirical results show that, due to the EU’s increasing long-termgas demand and decreasing indigenous production, there is a strong demand for the Nabucco gas pipelineby gas shippers. Furthermore, the empirical survey reveals that Nabucco provides a fair capacityallocation of fifty percent to third party shippers. Finally, competitive benchmarking shows Nabucco isindeed a cost-effective new pipeline and a link to fresh natural gas sources for Europe.Based on these results, it is anticipated that “Nabucco” will not only remain the name of a famous opera,but will also become the term associated with one of the most successful energy projects in Europe.
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