Azerbaijan bringing Southern Gas Corridor to life

/By AzerNews/

By Gulgiz Dadashova

The Southern Gas Corridor is a top priority for the EU in terms of its energy diversification plans and at this point the most important thing is bringing the corridor to life.

Amanda Paul, the policy analyst at the European Policy Centre in Brussels, believes that it is what Azerbaijan, the only country so far committed gas to the Southern Gas Corridor, is doing.

The 3,500-kilometer Southern Gas Corridor which would finally end Europe’s dependence on a single pipeline was initially launched as part of the South Caucasus Pipeline Expansion, which will connect the Sangachal terminal with eastern Turkey through Georgia. It will link up with the SOCAR-led TANAP to be connected with a third pipeline TAP on the Turkish-Greek border.

“So far Azerbaijan is the only country that has committed gas to the SGC although it is hoped that more will follow,” she wrote in an e-mail to AzerNews. “Efforts on ongoing to also contract gas from Turkmenistan although nothing concrete has been agreed, not least, because of the issue of getting this gas across the Caspian which is still fully of difficulties.”

Turkmenistan considers delivering its huge natural gas reserves to the West via the Trans-Caspian pipeline project, a proposed project which would run under the Caspian Sea to reach Azerbaijan, then Georgia, and finally connect with TANAP.

As to Moscow’s counter moves in case Turkmenistan makes a decision on gas supply to Europe, the expert noted that the Turkmens are very careful in terms of their foreign policy moves, including on energy.

“It is clear that Russia would not like to see Turkmenistan sell huge amounts of gas to Europe. But this is far from being realized anyway, not least, because it is not clear which route would take the gas to hook up to the Southern Gas Corridor.

The Trans-Caspian-Pipeline is far from being realized as both Russia and Iran do not want it. Furthermore it would require significant investment. The Turkmens prefer to play a waiting game. Wait until all the necessary infrastructure is in place and operational; when gas is flowing from other sources,” she said.

The expert also reminded the country also enjoys opportunity to sell gas to China and other Asian states. “I do not think we should overestimate what would be Russia’s “counter move” if Turkmenistan eventually sold. Azerbaijan has already achieved this, as Baku broke Russia’s hold on pipes going to the West when the BTC pipe was inaugurated. It’s not always easy to do this but ultimately sovereign states should be allowed to pursue their own interests.”

The Trans-Caspian pipeline project is not a new idea, but the Caspian countries have yet to reach a resolution on the issue at a time when Iran and Russia is opposing any undersea project.

Still, the governments of Azerbaijan and Turkmenistan state that the route for a pipeline project under the Caspian could be agreed by Turkmenistan and Azerbaijan without consent of the other littoral states.

Regarding the Russian-Turkish initiative Turkish Stream, Paul said the EU is slowing coming to terms that this will almost certainly become a reality although that does not mean any of the gas will ever come the EU market.

“Russia will need to meet its obligations in the current contracts it has with various member states, it cannot just switch transit routes with the blink of an eye. Furthermore, new infrastructure would need to be built in South Eastern Europe and at the moment there is no appetite to do so,” she wrote, noting that everything can change in the future but it would involve a lot of investment

Paul said the EU is committed to strengthening its internal energy market so that countries that now find themselves rather disconnected can be connected to an internal gas market. However, one should not rule out that some countries, including Bulgaria, may use gas from Turkish Stream.

Commenting on possible Iranian gas supply to Europe, Paul noted that a deal with Iran will change the face of the entire region and Iran would once again be able to play a full regional and global role including related to its energy policy.

“However, after so many years of isolation due to sanctions, Iran’s gas infrastructure is not in good shape and would require huge investment which could take several years. Furthermore it is likely that resurrecting the oil industry may take precedence over gas. However, ultimately Iran could be a source for the Southern Gas Corridor.”

Speaking about the huge volumes that potential supply routes to Europe offer for European consumers, Paul said the EU will consider to consume a large amount of gas for the foreseeable future.

“However we are moving towards a buyers rather than a sellers market which was not the case in the past.

Moreover, the EU aims to diversify its energy mix meaning that increased green energy, renewable, etc will be increase in the future so ultimately there will not be a gigantic jump is gas consummation. The point is to reduce the amount of gas the EU currently gets from Russia by achieving the maximum routes and sources,” she wrote.

The EU imported 53 percent of its consumed energy in 2014, to a cost of about €400 billion, according to the European Commission. Six of the 28 EU member states are 100 percent dependent on Russian gas which makes up 27 percent of all gas consumed by the EU.