Europe has come to Baku for gas
Baku, Azerbaijan, Feb.12
By Vagif Sharifov - Trend:
The Minsk negotiations on the situation in Donbass which ended today with signing of the document on pullback of heavy weapons by the parties to the conflict don't give full guarantees to Europeans for the safety of Russian gas supply. Europe ended its active search for alternative routes and volumes of imported gas, settling for Azerbaijan and the Southern Gas Corridor project which is under implementation.
The meeting of the ministers as part of the first meeting of the Advisory Council of the Southern Gas Corridor held in Baku today, was mainly dedicated to the implementation of the Stage-2 of development of Azerbaijan's Shah Deniz large gas condensate field.
Alongside with other Azerbaijani fields, Shah Deniz field, located in the Caspian Sea, will provide Europeans with heat and electricity, at the same time, it will relieve European politicians' 'headache' that has increased over the last year due to the protracted conflict in Ukraine and in the Middle East.
Azerbaijan plans to start large-scale gas supplies to Europe after five years when the demand for fuel will reach 500 billion cubic meters per year in the European Union. The annual equity gas production in the European Union will be a little more than one-fifth (135 billion cubic meters) of demand by 2020. The EU will have to import over 70 percent (359 billion cubic meters) of gas per year in order to prevent the economic slowdown.
Today's meeting of ministers as part of the Southern Gas Corridor project in fact is a sign to the European consumers that they will have a stable and reliable gas supply source.
Not only Azerbaijan, but also all transit countries and all the participants are fully dedicated to the work. For instance, Georgian Energy Minister Kakha Kaladze said today in Baku that during the meeting, Georgia expressed its readiness to resolve any problem that can arise in the process of the project's implementation in the country's territory.
The Southern Gas Corridor has almost all the fundamental elements, such as:
- The Shah Deniz field. Since the Stage-1 of this field's development, gas has been successfully transported to Georgia and Turkey for many years. The field's proven reserve is equal to 1.2 trillion cubic meters of gas.
- The final investment decision on the implementation of the Stage-2 of Shah Deniz field's development was adopted in 2013. Thus, 10 billion cubic meters of gas from the Shah Deniz field will be delivered to the European market after five years and 6 billion cubic meters will be annually delivered to Turkey.
- There is only one thing to be done: to create a pipeline infrastructure. All the partners of the Southern Gas Corridor project have experience in creating such an infrastructure. Moreover, the 'corridor' will use the existing South Caucasus gas pipeline which should only be slightly expanded.
- Trans-Anatolian (TANAP) and Trans-Adriatic (TAP) gas pipelines will be constructed.
Regarding TANAP, Turkish Minister of Energy and Natural Resources Taner Yildiz said that its construction is going on rapidly.
"There are no political and technical problems for the implementation of TANAP project," said Yildiz. By the way, gas will be delivered to Turkey in 2018 and after completing the construction of TAP, the fuel will be delivered to Europe in 2020.
This infrastructure will allow not only gas from the Shah Deniz field, but also from such fields and promising structures of Azerbaijan as Absheron, Umid, Babek and Nakhchivan to enter the European market.
The US also confirms the significance of Azerbaijani gas for Europe. The US Energy Information Administration (EIA) noted in one of its reports: "although traditionally it has been a prolific oil producer, Azerbaijan's importance as a natural gas supplier will grow in the future as field development and export infrastructure expand."
EIA emphasizes the growing importance of the whole Caspian Sea region and Azerbaijan, as a source of global energy resource production is one of the countries located in this region. The proven and probable gas reserve in the Caspian Sea exceeds 8 trillion cubic meters, according to EIA estimations.
Vagif Sharifov, is an oil markets expert, development director at Trend Agency. Follow him on Twitter: @VagifSharifov