ISSN 2330-717X

EU To Make Southern Corridor A Top Priority – OpEd

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By Gulgiz Dadashova

The European Union hopes to secure its natural gas sources at a time of troubled ties with major supplier, Russia. At this juncture in what could become a major energy crisis in Europe, Azerbaijan once again reemerges as the most cost-effective and secure energy supplier.

The route that will deliver Azerbaijani gas to Europe was defined as a priority in the EU’s efforts to diversify sources and routes of energy supply, as Miguel Arias Canete, EU Commissioner for Climate Action and Energy said.

“The Southern Corridor project will be a top priority,” Canete said on February 4.

“We will double our efforts to diversify energy supplies, their sources and routes. The recent story of the South Stream should become a lesson and an opportunity for us. From now on we will focus attention on the projects that will allow us to diversify supplies,” he noted.

European officials be it EU commissioners or premiers of the EU states have repeatedly confirmed that they rely on Azerbaijan as an alternative gas supplier. Europe does not intend to abandon its goal to reduce dependence on Russia, as the officials has openly stated that the EU recognizes the need for securing alternative gas supply and gives priority to real projects rather than initiatives.

The Turkish Stream project is at a very early stage and it will be interesting to see how the project will evolve, both in terms of investments and market potential, Italian Ambassador to Azerbaijan Giampaolo Cutillo told Trend, commenting on the discussed projects.

“The SCP-TANAP-TAP implies, furthermore, a complex binding legal framework for all parties concerned, both private companies and governments, and we have to start to think of it more as a reality than as an on-paper project,” the ambassador said.

The hot discussions on the mentioned projects gained new speed after Turkey’s statement on rivalry between TANAP and Turkish Stream, and the picture become even stranger with the statements of the new Greek government.

Panagiotis Lafazanis, new Greek energy minister, said the Greek government supports the construction of the Trans Adriatic pipeline, but it wants to get more benefits from gas transit through Greece’s territory.

Speculations of better route options have recently risen on the eve of the first meeting of the advisory council for the Southern Gas Corridor scheduled for next week in Baku. The energy ministers of countries that are on the Southern Gas Corridor, including Croatia, Bulgaria, Greece, Albania, and high-level EU officials are expected to participate in the event to mull European energy policy and to identify the necessary new paths to ensure the desired European integration.

Several pipeline projects and energy-rich countries are competing with one another to bring to life the idea of being a major gas supplier to Europe, consuming over 18 trillion cubic feet of natural gas a year.

Europe has considered so far various initiatives, including Nabucco and Russia’s South Stream project, which failed to materialize and was replaced by Turkish Stream initiative.

The Southern Gas Corridor designed to supply gas to Europe from the Caspian and the Middle East in the future remains the only real gas pipeline project for now.

Azerbaijan and its Western allies together with the major energy companies worked hard to breathe life into the Southern Gas Corridor, being part of the major transport and energy links between Europe and the Caspian region.

However, today several governments, particularly Russia, which is the main gas supplier of Europe and also main opponent over the Ukraine events, are pushing for their projects. Some join these initiatives with more ‘political’ interests, while others appear to make more business sense given the strategic locations.

The economic point comes first while assessing the future gas routes, as the infrastructure, the volume of supply and demand are key for realizing project rather than “wishes”. The Southern Gas Corridor in fact loses points to Turkish Stream over the gas volumes, but it leaves behind the Russian-Turkish initiative given the available infrastructure, secured gas volumes and exact date of the realization – 2019 for the first gas supply via the TAP.

Another aspect when considering competing projects is that some appear to have difficulty in raising the required finances, while others have everything organized.

The financial situation of Russia is far from brilliant due the imposed sanctions, “junk” ratings of international institutions and declining oil prices. Turkey and Europe also didn’t mention so far any intention to finance the project. It therefore remains unclear how exactly Turkish Stream would be financed.

The main political factor, here is how much the supplies will be secured. Russia, lost its credibility due to gas wars between Moscow and Kiev, and Europe mainly mentions Azerbaijan as a reliable source and partner and relies on gas from Azerbaijan’s Shah-Deniz, at least during its first phase. Other countries such as Turkmenistan, Iran and Iraq would be added when political conditions allow.

The Trans Adriatic Pipeline will turn on the Southern Gas Corridor to Europe and provide access to natural gas from the Caspian Sea region. The project capacity will expand from 10 to 20 bcm per year depending on throughput, the TAP consortium says.

The Southern Gas Corridor is recognized as being ‘of European interest’, while other projects such as Turkish Stream do not enjoy the same status. But, the EU’s final position is still to come out.

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