Azernews.Az

BAKU – European Commission President Jose Manuel Barroso and Azerbaijani President Ilham Aliyev will sign in Baku on Thursday a joint declaration to establish the so-called southern corridor, or projects that would enable tapping of Caspian gas resources and supplement existing route from Russia.

"I am sure that together we will create the necessary conditions for this strategic initiative to take place," Barroso said in a statement on Tuesday in Brussels ahead of his visit to Azerbaijan.

The European Union is keen on diversifying its supplies of natural gas to ease its energy dependence on Russia. But efforts to create a "Southern Energy Corridor" across Turkey, and especially a gas pipeline dubbed "Nabucco" to the Caspian, have so far borne little fruit.

Nabucco is the EU's flagship energy project, designed to pipe fuel from the Caspian Sea and northern Iraq all the way to Austria. But the consortium building it has not yet signed gas supply contracts with either Azerbaijan or Turkmenistan, leaving the potential that there may not be enough fuel for it to carry.

Azerbaijan, on the western Caspian between Russia and Iran, was expected to be the first supplier to Nabucco, a link that would ship Caspian gas more than 3,300 kilometers (2,050 miles) to European markets.

In an effort to diversify its supply sources, the 27-nation EU has agreed to help fund the 7.9 billion-euro ($10.2 billion) Nabucco pipeline. The venture, led by OMW AG, is competing with South Stream, a project headed by Russia’s gas monopoly Gazprom, and Italy’s Eni SpA.

The Nabucco partners, which also include Essen, Germany-based RWE, Budapest-based MOL, Bulgargaz, Romania’s Transgaz and Ankara-based Botas, have said they will decide on the investment this year. The shareholders are seeking to secure as much as 31 billion cubic meters of gas a year for the link and resources from Azerbaijan’s Shahdaniz gas development could be sufficient to make the pipeline operational, according to EU estimates.

During European Commission President Barroso and EU Energy Commissioner Guenther Oettinger’s visit to Azerbaijan, which begins on Thursday, the parties are also expected to sign a declaration on cooperation covering political and economic reforms.

On Friday, Barroso will leave Azerbaijan for Turkmenistan, holder of the world’s fourth-largest gas reserves.

The European Commission head was previously expected to visit the Central Asian state first and then head to Azerbaijan.

The visit comes at a critical time, as Azerbaijan's government is expected to decide within months whom it will award contracts to exploit gas from Phase 2 of developing the huge Shahdaniz offshore field.

Some analysts say that Russia is pushing both Azerbaijan and Turkmenistan to ship their gas through its pipelines instead, in a bid to keep its energy dominance over the energy-thirsty EU. China is also interested in accessing the region's huge energy reserves.

That leaves the EU in a complex bidding game against the two most powerful players in the Caspian region.

Turkmenistan’s President Kurbanguly Berdymukhamedov said in a television report Tuesday that he had instructed the energy sector to build closer links with Europe.

"Today we are also ready to supply gas to European states," Berdymukhamedov said. "We need to resolve this issue this year."

Baymurad Hojamuhamedov, the deputy prime minister with responsibility for the energy sector, said in November that Turkmenistan would have up to 40 billion cubic meters of gas available to send to Europe, without giving a date.

‘Key year’
The Nabucco consortium has welcomed the visit of the European Commission president and the EU energy commissioner to Azerbaijan and Turkmenistan and supports them in putting forward a strong case for Nabucco.

"2011 is a key year for Nabucco, with decisions to be made that will greatly affect the future of Europe’s energy supply," said Christian Dolezal, the spokesman for Nabucco Gas Pipeline International. "This is why the EU needs to build on its relationships with potential source countries for Nabucco, such as Azerbaijan and Turkmenistan. With Central and Western Europe facing a considerable shortfall in its energy supply over the next two decades and gas prices expected to increase as domestic production declines, unlocking untapped supplies and transporting them to Europe will be of utmost importance."