Azerbaijani gas gains more trust in European energy security

By: Gulgiz Dadashova

The Southern Gas Corridor gains more and more trust for Europe’s energy security, as the European Union has reportedly decided to increase the capacity of Trans-Anatolian Pipeline project — one of important components of the Southern Gas Corridor designed to pipe natural gas from the Shah Deniz field of Azerbaijan to Italy.

It showed the EU’s decisiveness to stay firm and not to seek resurrection of Moscow’s South Stream project but instead to focus on an alluring route.

Azerbaijani President Ilham Aliyev, Turkish Energy Minister Taner Yildiz and EU Energy Commissioner Maroš Šefčovič reached an agreement on gas pipeline project TANAP, Der Spiegel reports. “Europe wants to receive annually 20 billion cubic meters of natural gas, rather than 10, as is discussed above,” the report reads.

“There are technical prerequisites for power increase,” said Šefčovič. All the participants of negotiation agreed that the construction of the gas pipeline will be completed by 2019, he added.

The proposed increase in the pipeline capacity allows expanding the list of countries that can be supplied with gas. Rejection of the “South Stream” forced a number of Central and South-East countries to search for new sources of gas supply, and more countries will be covered by the Azerbaijani gas, the sooner Azerbaijan will strengthen its position in the EU market.

Europe reiterated that the South Stream was never a real priority for the European Commission as it always was looking for alternative suppliers. Baku and Ankara, instead of Turkey’s recent gas deals with Moscow, assured commitments to implement the SGC projects, and Europe also voiced its commitment to buy the projected volumes of gas.

First gas deliveries to Europe planned in 2020. The cost of the work on all elements of the Southern Gas Corridor is estimated at almost $45-48 billion, according to the preliminary data.

Meanwhile, Turkish Prime Minister Ahmed Davutoglu said TANAP, currently being implemented by Azerbaijan and Turkey is Energy “Silk Road”.

TANAP is one of the most successful projects in the region, Davutoglu said stressing that Azerbaijan and Turkey will implement large-scale economic projects, reports the Mersinhaberler newspaper.

Even if the initial volumes through SGC may seem insignificant, the contribution of Azerbaijani gas to the specific gas buying countries is enormous and can help them to solve their energy supply concerns. Thus the Southern Gas Corridor will be a major energy highway cementing Azerbaijan’s contribution to keep the lights on and the homes warm in Europe.

At the latest Brussels meeting on December 9, Šefčovič said Azerbaijani leadership sees SGC as a priority and guarantees the timely delivery of the project on their side. He also admitted that EU partners on SGC, Azerbaijan and Turkey have already fulfilled their commitments to the project.

“Now they expect us to do our part of the deal. At the end of the day, SGC will contribute to the energy security of Europe”. He indicated that time has ripened for the establishment of Energy Union and there are all the conditions to see it through.

Within the second phase of Shah Deniz project development it was planned to produce some 16 billion cubic meters of gas, six billion of which will be transported to Turkey and ten billion to Europe.

Currently, there may be concerns about the source of additional four billion cubic meters of gas. But, one shouldn’t forget that Azerbaijan’s proven natural gas reserves were roughly 35 trillion cubic feet (Tcf) as of January 2014, EIA reports. The vast majority of these reserves are associated with the Shah Deniz field. Discoveries of the Absheron and Umid formations added a further 15 Tcf of resources estimated in place. Also the country has plans for the development of prospective structures Babak, Shafag-Asiman, Nakhchivan and others.

TANAP is designed for real volumes of gas from Azerbaijan and the entire Southern Gas Corridor route has already been calculated. Moreover, all volumes of Azerbaijani gas have already been reserved and distributed among the European buyers.

The EU energy ministers already view the possibility of simplifying political and bureaucratic hurdles when implementing the European energy project, as well as giving assistance in addressing these issues to its partners outside the EU.

The future energy game can cover new players like Iraq, Iran and Turkmenistan, and the trust-gaining SGC can meet the demands when transporting these reserves to European and global markets. There is also another SGC project option – the Trans-Caspian gas pipeline carrying gas to Europe from Turkmenistan. Currently, talks are ongoing between Europe, Azerbaijan and Turkmenistan.