EU expects Azerbaijan to play key role in gas supplies to Europe
By Aynur Jafarova
Azerbaijan plays an essential role as an oil supplier and the country is expected to play a similar leading role in gas supplies to Europe, EU Energy Commissioner Guenther Oettinger said in a message sent to the participants of the Caspian Oil and Gas 2013 conference being held as part of a major international Caspian oil and gas exhibition in Baku.
The message, read out by the head of the EU delegation to Azerbaijan Roland Kobia, says significant progress has been made in realizing the Southern Gas Corridor, which refers to a planned series of links aimed at diversifying the routes and sources of energy supply for European countries.
"Currently we are waiting for the final decision on a pipeline route," Oettinger wrote.
The consortium developing Azerbaijan's giant Shah Deniz field in the Caspian Sea is considering Trans Adriatic Pipeline (TAP) and Nabucco West for gas export to European markets. The consortium will make its final decision on the pipeline route in June and a final investment decision by October 2013.
The TAP project is designed to transport gas from the Caspian region via Greece and Albania and across the Adriatic Sea to southern Italy and further into western Europe. TAP's initial capacity will be 10 billion cubic meters per year, but it is easily expandable to 20 billion cubic meters.
Nabucco West, a short-cut version of the Nabucco project, which envisages construction of a pipeline from the Turkish-Bulgarian border to Austria, and TAP are part of the Southern Gas Corridor.
The gas which will be produced during the second stage of Shah Deniz field development, which is expected to start in 2017 or 2018, is considered as the main source for the Nabucco West and TAP projects.
Oettinger also expressed hope that eventually there will be investors for both Nabucco West and TAP projects. Shah Deniz gas will be the first gas to be transported through the Southern Gas Corridor.
"This will be just the beginning, not the end," the message said.
The Shah Deniz field, which is one of the world's largest gas-condensate fields, was discovered in 1999. Its reserves are estimated at 1.2 trillion cubic meters of gas. Overall, the field has proved to be a secure and reliable supplier of gas to Azerbaijan, Georgia and Turkey as well as Europe.
"We see the Southern Gas Corridor as a multistage project," Oettinger's message said. "The EU expects more gas from other sources like Turkmenistan to be transported through this corridor. In this regard, we will continue the negotiations with Azerbaijan and Turkmenistan on the Trans-Caspian pipeline. We expect agreement to be reached in the nearest future."
The Trans-Caspian Gas Pipeline running around 300 kilometers will be laid from the Turkmen coast of the Caspian Sea to Azerbaijan, where it will be linked to the Southern Gas Corridor. The pipeline's capacity is 30-40 billion cubic meters of gas per year.
The message also emphasized that Azerbaijan is a partner of the EU not only in the energy sector but also is one of its key partners in the Eastern Partnership program.
Speaking at the 20th International Caspian Oil & Gas Exhibition Incorporating Refining and Petrochemicals, US Deputy Assistant Secretary of State for Energy Diplomacy Amos Hochstein said that the U.S. strongly supports the implementation of the Southern Gas Corridor, which is one of the EU's flagship energy projects.
"Opening of the Southern Gas Corridor will change the energy map of our continent," he said.
According to Hochstein, the Southern Gas Corridor will be an important link for delivering Caspian gas, initially from Azerbaijan's Shah Deniz field, then from Turkmenistan and hopefully from northern Iraq, to Europe.
"The U.S. will support either pipeline to be selected by the Shah Deniz consortium. We believe that the pipeline which is selected will diversify energy supplies to Europe," he said.
The US and British embassies in Azerbaijan jointly organized an official reception on June 4 in connection with the international Caspian oil and gas exhibition. Hochstein said in his remarks there that Azerbaijan plays an important role in the supply of Caspian energy resources to Europe and the U.S.
According to him, the U.S. is neutral in the choice of the route - either Nabucco West or TAP. The main issue of interest for the U.S. is the supply of Azerbaijani gas to European markets.
"The decision on selection of TAP or Nabucco depends on the companies involved in the consortium," Hochstein said.
US Ambassador to Azerbaijan Richard Morningstar said at the reception that Azerbaijan has become a strong country which makes a significant contribution to global energy security.
According to him, the U.S. has always supported Azerbaijan's becoming a strong and independent energy-producing country.
Azerbaijan contributes to the energy security of the world through the Baku-Tbilisi-Ceyhan oil pipeline, the ambassador said, adding that Azerbaijan is about to make another important contribution to the energy supply by expanding the Southern Gas Corridor.
Morningstar said this endeavor is of great importance both from the political and commercial point of view and will be an important element connecting Azerbaijan and Europe.
"This will provide great opportunities for investments by US and British companies," the ambassador said.