Azerbaijan – the best option for EU to diversify gas supply sources

Photo: Azerbaijan – the best option for EU to diversify gas supply sources  / Oil&Gas

Baku, Azerbaijan, April 8

By Aygun Badalova -Trend:

The Crimean crisis has made Europe suddenly ​​aware of how dependent it is on the gas supplies from Russia, Arthur Bayhan, senior international economist and competitiveness expert said in its article published in AZERNEWS online newspaper.

In his article Bayhan stressed that currently, the EU covers more than 60 percent of its gas consumption through import, and, according to the International Energy Agency (IEA), the consumption in the EU member states will grow and the share of imports in 2035 will climb to more than 80 percent.

"Russia is at a third of EU imports by far the more important gas supplier - and the Crimean crisis has shown the risks of this dependence. In the wake of the Crimean crisis, all the heads of the EU member states announced a new look at the entire energy policy," he said.

Bayhan believes that the current debates are concentrated on two possible scenarios: shale gas fracking in the resource potential EU member states and identifying other potential resource countries for gas supply.

In the second scenario, Bayhan believes Azerbaijan presents the best option for the EU.

The role of Azerbaijan in supplying gas to Europe seems to be more likely for several reasons, Bayhan said.

"First, since its independence, Azerbaijan has been developing strong socio-economic and political relations with the western countries, including the US, Israel, Europe as well as with Turkey the latter is proposed to be used as a transit country of the gas from Azerbaijan on to Europe. Therefore, the EU geopolitical realignment with Azerbaijan is more anticipated than with Turkmenistan and Iran," Bayhan said in his article.

"Secondly, Azerbaijan has already signed an agreement with the Turkish government for the construction of the Trans-Anatolian Gas Pipeline (TANAP) to carry natural gas from Azerbaijan via Georgia to Turkey and on to Europe," he said.

Talking about Turkmenistan as the potential source for European gas supplies, Bayhan mentioned that the country is currently supplying most of its gas to Russia -- about 50 billion cubic meters (bcm) a year, which is mostly resold to Ukraine. It further sells around 20 bcm to China which is expected to increase up to 90 bcm in the future, and 10 bcm to Iran

"According to a study carried out by Gaffney Cline & Associates, an oil advisory firm, the South Yolotan-Osman field in the southeast of Turkmenistan contains between 4 trillion and 14 trillion cubic meters of gas. This estimate is three times the European Union's annual consumption of the fuel," Bayhan said.

Bayhan also believes that once the relations between the West and Iran are normalized Iran might be another option for the EU.

"Iran has the world's second largest gas reserves after Russia. The U.S. Energy Information Administration estimated Iran's proved gas reserves as of the start of 2013 at 1,187 trillion cubic feet (33.6 trillion cubic meters)," he said.

The Iranian gas might be interesting in case the relations between Iran and the West are tremendously improved, Bayhan believes.

The Southern Gas Corridor is a project that will allow Europe to diversify its sources of hydrocarbon supply and strengthen energy security. Gas is to be produced within the second stage of Azerbaijani Shah Deniz field development is considered as the main source for the Southern Gas Corridor project.

As part of the project, Europe will be getting some 10 billion cubic meters of gas from Azerbaijan on an annual basis.

The gas to be produced within the second phase of the field's development will be exported to Turkey and to European markets by means of expanding the South Caucasus Pipeline and construction of the Trans-Anatolian Gas Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP).

Bayhan in his article said that the TAP will not only reduce the EU dependence on Russia but also it will reduce substantially the gas prices for the EU consumers.

Any additional flows of gas coming from the Caspian Sea will undercut Russian dominance in Europe, Bayhan believes.

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