EU expects significant progress in Southern Gas Corridor project
By Aynur Karimova
The Southern Gas Corridor project, aiming to bring the Caspian gas to Europe, is one of the biggest construction projects of our time.
This was announced by Vice-President of the European Commission for Energy Union, Maros Sefcovic at the High-level Conference titled "EU energy cooperation with the Eastern Neighborhood and Central Asia" in Brussels on March 18.
“Very important area where I expect we make significant progress this year is the Southern Gas Corridor. This pipeline chain of 3,500 km whose value $45 billion is one of the biggest construction projects of our times,” he said.
Sefcovic emphasized that with this, Europe will start receiving the Caspian gas in 2020.
Today the Southern Gas Corridor is among the European Commission’s priority energy projects, which aims at diversifying the EU gas supply sources and routes.
This project envisages the transportation of the gas extracted at the giant Shah Deniz field in the Azerbaijani section of the Caspian Sea. Shah Deniz Stage 2 gas will make a 3,500 kilometer journey from the Caspian Sea into Europe. This requires upgrading the existing infrastructure and the development of a chain of new pipelines.
The existing South Caucasus Pipeline will be expanded with a new parallel pipeline across Azerbaijan and Georgia, while the Trans-Anatolian pipeline will transport Shah Deniz gas across Turkey to join the Trans-Adriatic Pipeline, which will take gas through Greece and Albania into Italy.
The first gas supplies through the corridor to Georgia and Turkey are given a target date of late 2018. Gas deliveries to Europe are expected just over a year after the first gas is produced offshore in Azerbaijan.
Meanwhile, Fitch Ratings predicted that the Southern Gas
Corridor project’s net financial needs for operations and capex
will be close to $8.4 billion in 2016-2019.
Fitch expects the Southern Gas Corridor to tap debt capital markets
for funding in the medium term, while bonds and loans could be
supplemented by state capital injections should offered market
terms be unacceptable,” the agency reported on March 17.
The Fitch experts believe that the projects under the Southern
Gas Corridor's development carry strategic importance for
Azerbaijan's long-term macroeconomic stability, "while the most of
the gas is already contracted until 2045 by buyers from the EU and
Turkey."
Fitch considers Azerbaijan's control over the Southern Gas
Corridor's operations as strong and views the government support
previously provided to the project as a supportive rating
factor.
The Azerbaijani government has recently held road shows of bonds
for the Southern Gas Corridor in the world's major financial
centers - London, New York, Los Angeles, San Francisco and
Boston.
The Southern Gas Corridor's bond offering under the state guarantee
is forecasted at the level of $1 billion depending on market
conditions.
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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova
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