Analysis: Southern Gas Corridor. Azerbaijan rediscovers way from Caspian Sea to Europe

Baku, Azerbaijan, Sept.19

By Seymur Aliyev - Trend:

An event of global significance has occurred in Azerbaijan today. The implementation of one of the most ambitious modern projects "Southern Gas Corridor" was launched.

Symbolically, the foundation of the project for the delivery of Caspian gas via Georgia and Turkey to Europe was laid in Baku on September 20, the twentieth anniversary of signing the so-called "Contract of the Century" (a project of developing the "Azeri-Chirag-Guneshli" block of fields).

Although Azerbaijani gas from the Shah Deniz field will be supplied via this route in the future, this route can be important to deliver Central Asian and even Iranian energy resources to Europe in the future.

The political will of Azerbaijan, which is the initiator of all large projects in the region, played a significant role in the implementation of this project.

The Southern Gas Corridor includes the projects of expanding the South Caucasus gas pipeline (Baku-Tbilisi-Erzurum), constructing TANAP gas pipeline in Turkey and the European TAP gas pipeline.

First, a new route will help Europe to diversify the sources of gas supply and to discover new alternative routes. Today, Central Asia can be one of the main sources of gas for Europe. Three directions, namely, Russia, Iran and through the Caspian Sea to Azerbaijan and further can be considered for gas supply through pipelines.

However, the route through this country will not be an alternative route for the EU looking for the sources first of all to reduce dependence on Russian gas. The political problems of Europe and the U.S with Iran do not make the route through this country as alternative route either.

The transportation of energy resources from the gas-rich Central Asian region through the Caspian Sea and Azerbaijan, is the most promising route.

In this respect, with the opening of the Southern Gas Corridor, suppliers get a new route with convenient infrastructure able to handle the increasing volume of supply.

A final investment decision was made on December 17, 2013, on Stage 2 of the Shah Deniz offshore gas and condensate field's development.

The gas to be produced as part of the Stage 2 of the field's development will be exported to Turkey (six billion cubic meters per year) and to the European markets (10 billion cubic meters per year).

Azerbaijan is expected to increase the volume of gas exports in the future, by producing gas from such fields as Umid, Absheron and others.

Although this is not a critical volume, the significance of the Southern Gas Corridor for Europe lies in the opening of a new route that may be significantly expanded in the future.

Azerbaijan has already once passed this way. Before the Baku-Tbilisi-Ceyhan oil pipeline came on stream, many criticized this project, claiming that it will be ineffective and unprofitable.

However, the time showed that all these arguments were fallacious. This oil pipeline paved a kind of road from the Caspian Sea to the Mediterranean Sea. Today, not only the Azerbaijani oil, but also Kazakh and Turkmen oil is transported via this pipeline.

Seymur Aliyev is Head of Trend Agency's Russian News Service