Azerbaijan several years ahead of its gas rivals

By: Seymur Aliyev

What is the difference between the projects for supply of Azerbaijani gas to Europe and all other similar projects? The difference is that the first ones are under implementation. Seemingly, it is a simple question and a simple answer. However, today there are so many talks around the projects of those intending to supply their gas (and sometimes, even the gas that hasn’t been produced yet) to Europe that sometimes it seems there is simply no room for the Azerbaijani gas in this market.

What is the true story? The consortium of the Trans Anatolian Natural Gas Pipeline (TANAP) chose the contractors for the pipeline’s construction on Dec.23. These contractors are the Fernas Insaat, the Sicim-Yuksel-Akkord consortium, and Tekfen Holding.

Previously, the pipe suppliers for the pipeline were determined. Even earlier, the route was determined and environmental documentation was prepared. All these activities were carried out as part of the TANAP project alone.

As for the entire Southern Gas Corridor project, it should be noted that contracts worth of $10 billion have been signed as part of the Shah Deniz project (gas from which will go to Europe), agreements with the gas purchasers in Europe have been signed and the work on starting the construction of the Trans Adriatic Pipeline (TAP) is underway.

Quite simply, Azerbaijan and its partners are several years ahead of all their possible rivals. Investments alone are not enough to catch up with it. Years of negotiations and agreements with Europe are needed which can not be bought or built.

Today, Russia wants to supply gas to South Europe, Israel has also showed interest in this and some point to a possible competition with Azerbaijan. Nevertheless, Baku has already announced that the first gas to be produced as part of the Stage 2 of Shah Deniz project will be delivered to Turkey is 2018 and to Europe in late 2019 and early 2020. What about other suppliers? They haven’t specified any timeframe.

On the other hand, the situation is not so bad for those intending to supply gas to Europe.

In the future, they can benefit from the infrastructure of the Southern Gas Corridor which is being created by Azerbaijan and its partners. Here we mean both the country’s intending to supply gas today and the states which are ready to do this in the future – for example, Turkmenistan and possibly, Iran.

The practice shows that Azerbaijan’s decision to implement any major infrastructure project leads to the emergence of many wishing to take advantage of the “paved road”. However, Baku has repeatedly expressed readiness to offer its infrastructure for the supply of Turkmen gas.

Apparently, the infrastructure in Turkey or Europe can also be used by third-party suppliers under certain conditions. However, given Azerbaijan’s plans to increase gas production from other fields, a question arises: Will there be a room for them in this infrastructure?