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Think tank: Azerbaijan to choose commercially attractive route for gas supplies to Europe

Oil&Gas Materials 2 April 2012 18:33 (UTC +04:00)
South-Eastern Europe chosen as a sales market of Azerbaijani gas will reduce the risk of dependence on one source of market, fellow at the Strategic Studies Center under the Azerbaijani President Gulmira Rzayeva told media today.
Think tank: Azerbaijan to choose commercially attractive route for gas supplies to Europe

Azerbaijan, Baku, April 2 / Trend E. Ismayilov /

South-Eastern Europe chosen as a sales market of Azerbaijani gas will reduce the risk of dependence on one source of market, fellow at the Strategic Studies Center under the Azerbaijani President Gulmira Rzayeva told media today.

"Weak diversification of gas supplies, both in Italy and in South-Eastern Europe, makes both markets attractive for Azerbaijan in terms of high gas prices," she said. "But a large number of countries in South-Eastern Europe will reduce risks of dependence on one market."

She said that despite the presence of a large number of countries in South-Eastern Europe, the gas consumption is small. However, if the Azerbaijani gas is brought to Baumgarten (gas hub in Europe), this will ensure the sale of gas, both in the market of South-East Europe, other European countries.

"Taking into account the plans to increase gas production in Azerbaijan, the development of the fields and perspective structures, including "Absheron", "Babak", "Umid" and others, the gas within the Shah Deniz second stage to the amount of 10 billion cubic meters can be transported to Italy," she said. "After obtaining additional volumes of gas, they can be delivered to Central and South-Eastern Europe."

Currently, the Shah Deniz consortium is considering three possible export routes - Nabucco, the South East Europe Pipeline (SEEP) and TAP. The final decision will be made in 2013.

She stressed that "Nabucco" project takes into account more consumer interests, rather than gas exporters. The companies participating in "Shah Deniz" project may join SEEP project. This will allow them ensuring their own interests.

In any case, Azerbaijan's main criterion for choosing the route of gas supplies to Europe is the commercial attractiveness and maximal profitability of the sales, Rzayeva stressed.
Azerbaijan is going to export 10 billion cubic meters to Europe within the Shah Deniz-2 project and considers several options to export gas to the European markets.

In February Shah Deniz consortium excluded ITGI from the list of those being considered to export Azerbaijani gas to the European countries, and made TAP (Trans Adriatic Pipeline) a priority route for export of Azerbaijani gas to Italy.

Gas reserves in the "Shah Deniz" field are estimated at 1.2 trillion cubic meters.
The contract to develop the offshore Shah Deniz field was signed on June 4, 1996. Participants to the agreement are: BP (operator) - 25.5 per cent, Statoil - 25.5 per cent, NICO - 10 per cent, Total - 10 per cent, LukAgip - 10 per cent, TPAO - nine per cent and SOCAR-10 per cent.

In particular, the concept of creating Trans-Anatolian gas pipeline, designed to ensure gas supply from the Turkish eastern border to the west one is under preparation. This will give an opportunity to choose among the projects envisaging gas supplies from the border with Turkey to Europe.

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