Azerbaijan considers Turkey and Europe as priority in terms of gas export, said President of the State Oil Company of Azerbaijan, SOCAR Rovnag Abdullayev in his interview to a special edition of The Business Year magazine.
“European consumers should know that we have to make multi billion dollar investments to be able to deliver our gas to Europe. The preliminary assessment of costs for Shahdeniz phase 2 is about 25 billion dollar to 26 billion. Therefore the gas we sell has to recover those costs and deliver a reasonable profit as well,” said Abdullayev.
“During 2011 we managed to narrow the initial pool of 14 companies that could be potential buyers of Azerbaijani gas from Shahdeniz 2. We have identified the potential pipeline projects for the Southern Corridor: Nabucco, the Interconnector Turkey- Greece-Italy, the Trans Adriatic Pipeline (TAP) and the Southeasten European pipeline, which is geographically going to follow the Nabucco route via Bulgaria, Romania and Hungary.”
Since all these projects needed Azerbaijani gas to go ahead, we had to prioritize one of them, because it is impossible to carry out all four at the same time. When one is started the other ones will be postponed. In February this year we selected a single pipeline to Italy and decided to undertake exclusive negotiations with TAP. No decision has yet been made on the selection of a single pipeline toward South Eastern Central Europe and we expect to finalize our choice by mid -2012. A final route selection for an initial 10 bcm per annum from the Shahdeniz field to Europe will be made no later than the planned final investment decision for the Shahdeniz in mid 2013.
Meanwhile, we continued our commercial engagement with potential buyers, to compile necessary information about the selected projects, and to the future develop our cooperation with the EC to implement to Southern Corridor strategy. We are now considering what the design of the pipelines should be in all the potential routes, keeping in mind not only current volumes of gas, but also all those volumes that would come from other fields in Azerbaijan after 2020 or 2025. We don`t just plan for the next 5 years but the next 15 to 20 years.
Our forecast for 2025 is that the production of national gas from Azerbaijan would be around 50-55 bcm. There for obviously, it is not economically feasible to build pipelines every one of our fields. Instead, we need to build a pipeline that can service all these fields and one that can be upgraded as the necessity areas. This leads to an interesting and innovative consept: scalability.
Throughout 2011 and continuing today we have been working on the concept that any pipeline project should be scalable; you start with one capacity, then end up with a second capacity, but in such a way that in prevents any losses, offers maximum efficiencies and doesn`t bring interruptions to operations. Therefore, 2012 is the year for decisions and in terms of starting the full-scale implementation of the Shahdeniz phase 2 project, there will also be financial decisions after which there is no point of return".