SOCAR paving the path to European retail gas market
By Gulgiz Dadashova
Azerbaijan’s energy giant SOCAR has revived a push for a bigger role in gas distribution in Europe, reaching new markets.
SOCAR President Rovnag Abdullayev announced on October 29 that the company is interested in the gasification of Montenegro, in Southern Europe.
Abdullayev said SOCAR continues work on a gas distribution project for Albania, and Montenegro expressed interest in joining this project. “We plan to work out a joint feasibility study for one big project for gasification of Albania and Montenegro, which will be more profitable,” he said.
SOCAR’s longstanding plans to run gas distribution networks in Europe could bring additional revenues to the country along with revenues from the sale of its Shah-Deniz gas via TAP.
The Azerbaijani gas could reach Europe by the end of this decade through the Southern Gas Corridor, which would carry billions of cubic meters of gas a year from Shah-Deniz II, one of the world’s largest gas fields with the reserves of over 1.2 trillion cubic meters.
Following the revival of interest in brining Caspian gas to Europe, SOCAR began to eye Europe’s gas distribution market.
In 2013, Azerbaijan’s SOCAR bought a 66 percent stake in the Greek gas distribution system DEFSA. But in late 2014, the Commission opened an in-depth investigation to determine whether SOCAR’s acquisition of DESFA is in line with the EU’s Third Energy Package.
The EU voiced concerns that Azerbaijan may get too much of “control” in Europe’s energy sector as both a supplier and distributor of natural gas.
Rather, Baku has claimed that from Azerbaijan's perspective, there was no conflict of interest in acquiring a majority stake in DESFA because the owner of the gas to be pumped through the SGC was not Azerbaijan, but the Shah-Deniz Consortium.
Currently, Baku is pushing for the European Union’s OK for the planned takeover of Greece’s gas distribution grid by SOCAR, which will eventually strengthen its role in southern Europe's gas supply system.
Given the lack of gas infrastructure in Albania and Montenegro, SOCAR has a good opportunity to invest in natural gas infrastructure and downstream markets in those countries.
SOCAR, which is involved in exploring oil and gas fields in Azerbaijan, enjoys great experience in gasification processes and the management of gas distribution networks in Azerbaijan and Georgia.
Albania, with which SOCAR signed deal in late 2014, appears to be one of the first places where Azerbaijan hopes to get busy soon.
Montenegro, a predominantly mountainous country, does not yet have any system for the distribution of natural gas. Gas consumption is currently limited to the use of gas in cylinders. So, SOCAR’s experience will be of high importance as in Azerbaijan even the mountains villages have been provided with gas.
Montenegro’s Prime Minister Milo Dukanovic praised the active role of Azerbaijan in the development of the Southern Gas Corridor and expressed his country's interest in expanding the TAP and the supply of Azerbaijani gas to his country.
During his recent Baku visit, Dukanovic stressed the importance of SOCAR’s participation in the establishment of a gas network in Albania, voicing hope that the company will soon take part in the process of gasification in Montenegro.
Meanwhile, Bulgaria is reported to have invited Azerbaijan to participate in the construction of filling stations and to invest in the construction of oil and gas storage facilities and refineries in the country.
Despite the fairly huge burden on SOCAR as a party to the major energy projects, the company continues its policy of investing in promising projects abroad.
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