Azernews.Az

Azerbaijan has taken steps to become a major supplier of natural gas to European markets. Additionally, the resource-rich South Caucasus republic is moving quickly its transform itself into not only an energy producer, but also a transit state in the region for the delivery of natural gas to world markets.
The Azerbaijani government predicts that gas production will amount to 39.106 billion cubic meters in 2012, or 42.7% above the 2008 projected figures. According to official sources, output for the Azerbaijani state oil company, SOCAR, will account for 9.25bn cubic meters of this volume (15.6% increase). Production of associated gas from the country`s major Azeri-Chirag-Gunashli (ACG) fields in the Caspian Sea by the BP-operated consortium, Azerbaijan International Operating Company (AIOC), will make up 16.056bn cu. m. (40.8% increase), while gas output from the largest Azerbaijani offshore field, Shahdaniz, will reach 12.5bn cu. m. (56.2% increase).
To meet its goals, the government intends to gradually increase gas output over the next three years. Output is expected to measure 31.5bn cu. m. in 2009, 32.680bn cu. m. in 2010 and 33.876bn cu. m. in 2011. Meanwhile, SOCAR`s production is predicted to meet 8bn cu. m. in 2009 and 2010, and 8.5bn cu. m. in 2011. Production of associated gas from ACG is expected to be 13.9bn cu. m. in 2009 and 15.08bn cu. m. in 2010 and up to 15.77bn cu. m. in 2011. Annual output from Shahdaniz is anticipated at 9.6bn cu. m.
In other developments, Azerbaijan has been unable to reach final agreement with Turkey on prices for exported gas as well as transit conditions. But a SOCAR official said Baku saw no problems in the ongoing negotiating process to prevent Ankara from signing a transit contract to export gas to European countries.
"There are no problems, and talks are under way. So far, there is no agreement. Each side has its own interests, and the positions of the sides are being agreed upon," the source said.
In order to export gas to Greece and Italy, which have already expressed their willingness to buy fuel, Azerbaijan needs a transit contract with Turkey. Exports of Shahdaniz gas to Europe will begin during the second stage of the field`s development, which will take place in 2012. Annual production during Phase 2 of the project is expected to be as high as 20bn cu. m.
In addition, Turkmenistan`s gas could be exported through Azerbaijani territory. Austrian energy giant, OMV, has described as positive recent talks held in the Central Asian state regarding possible supplies of gas for the NABUCCO pipeline, which seeks to deliver gas from the Caspian and Central Asia regions to Europe, by-passing Russia.
"Recent talks in Turkmenistan were undoubtedly successful," said Christian Dolezal, the OMV official in charge of international projects.
Boosting efforts to implement the NABUCCO project was high on the agenda during a recent meeting between Turkmen President Kurbanguly Berdymukhamedov and Wolfgang Ruttensdorfer, OMV`s Chief Executive. The Austrian energy company said it was interested in stepping up cooperation with Turkmenistan.
Dolezal also said successful talks with the Central Asian state were a positive step on the road to launching construction of the NABUCCO pipeline. He expressed confidence that enough gas is available from Azerbaijan, Turkmenistan or Iraq to enable the pipeline to fully operate.
The NABUCCO project, worth 8 billion euros, is designed to deliver Azerbaijani and Turkmen gas to European Union markets through a 3,300-kilometer pipeline traveling through Azerbaijan and Turkey to Romania, Bulgaria, Hungary and Austria. Six shareholders - German RWЕ, the Turkish Botas company, Romanian Transgas, Bulgarian Bulgargas, OMV, and Hungarian MOL hold equal stakes in the project. Energy giant Gaz de France is also seeking to purchase gas to be transported via the pipeline. So far, only Azerbaijan has agreed to transport its gas via NABUCCO.
European countries are expected to step up work on NABUCCO given that it is facing a major competitor - the Russian-backed South Stream pipeline that seeks to transport Central Asian and Russian gas to Europe, analysts say.
Apparently, the EU and the United States have yet to put forth enough political will to launch the implementation of the West-backed NABUCCO project which is pivotal for diversifying Europe`s supplies of gas, said Zeyno Baran, Director of the Center for Eurasian Policy at the Hudson Institute.
She also said that unlike South Stream, NABUCCO is a commercially viable project.
"The Russian pipeline project is being implemented just to complicate the realization of the NABUCCO project and increase Moscow`s energy and political clout," Baran told a recent energy forum in Budapest.
The analyst emphasized that prices for gas to be delivered through the NABUCCO pipeline to Europe will be lower than those for gas to be supplied via South Stream. She added that enough Azerbaijani and Turkmen gas is available to operate the pipeline at full capacity.
The increased attention of European nations to the region is understandable, as they are seeking new sources to meet their growing needs for natural gas. Consumption of gas in Europe is expected to rise by about 14 per cent in the coming years to reach 820bn cu. m. per year.