Power Engineering Divides EU into Two Europes

Azerbaijan, Baku, 11 November / Trend corr. S.Aliyev/ Europe's unification into a single political, trade and economic space causes no doubt today - single policy and currency, common borders. However, energy issue, one the acutest issues of today's economic life, still disjoins the European countries.

As a matter of fact, the European Union in this regard falls into two categories - the "old Europe" and the "new Europe". It is always easy for the "old" Europe to agree on energy resources supply with their eastern neighbour Russia, as they possess a more significant position, great influence at international organizations, serious trade and economic relations with Russia and mutual investing. Moreover, the "old" Europe today possesses diversified energy resources supplies (from the northern part of the region as well). A consequence is great number of contact points with Russia, and this enables powerful European countries to pursue flexible policy during negotiations on energy resources supply and to achieve more advantageous terms.    

"New" Europe believes a way out of the current situation is to adopt and implement united energy policy. These countries believe that it will enable unification of energy policy of the European Union (EU) countries and improvement of their energy security. Simply speaking, adoption of EU's united energy policy will oblige the huge European countries to support the East European participants of the EU during their negotiations on energy resources delivery. Moreover, this process will concern not only delivery of energy resources from Russia, but also new potential suppliers of energy resources to Europe, including the Caspian Sea region.

At present one of the basic issues of the European policy is ensuring of energy security. The United States is Europe's major supporter on this issue. However, it is necessary for Europe and the United States to increase their efforts in realization of energy projects and, particularly, the Nabucco gas pipeline project, experts said.

Although the EU's energy security policy envisages diversification of energy sources and energy transportation routes, the pipeline projects to deliver gas and oil from Russia, which include the South Stream and Burgas-Alexandrupolis oil pipelines, are under current implementation or discussion. All this indicates that "new" European countries still regard Russia as the major source of energy resources; moreover, this country strongly lobbies for its projects, gives guarantee in deliveries and is prepared to participate in their funding. Great policy is also pursued to prevent emergence of alternative energy resource suppliers (particularly gas to Europe) through a proposal to purchase it from the Caspian region and to create new unifications as so-called "Gas OPEC".

In the light of these processes, Europe's position on realization of Nabucco gas pipeline project is not clear. At present, it is necessary to accelerate realization of this project to create alternative routes of gas delivery. Availability of infrastructure built or being built will considerably raise the interest of suppliers to this project. Furthermore, delay in realization of the project leads to rise in its price (price of Nabucco has increased from about $7bln to $12.4bln). Beginning of implementation of the project will strengthen Europe's position on negotiations with potential gas providers.

Now Europe is discussing possible new sources to provide energy security and to diversify gas deliveries. Special attention in the process is paid to the Caspian region. The only transportation route of the Caspian gas (basically, the Azerbaijani and Turkmen gas), which does not pass via territories of Russia and Iran, is the Transcaucasian transport and energy corridor. One more advantage of this corridor is presence of modern infrastructure to transport oil and gas, including the Baku-Tbilisi-Ceyhan and South Caucasus gas pipelines, which have considerable throughput capacity reserves, increasing their attractiveness in transportation.

The South Stream project envisages supply of Russian gas to Southern and Central Europe through the Black Sea. South-west branch of the pipeline is planned to be laid over Greece, from where it will pass through the Ionian Sea to Italy. The planned throughput capacity of the pipeline is 30bln cu m of gas a year. Launch of deliveries is scheduled to 2013.

Nabucco is a projected trunk pipeline with the length of 3,300 km, bypassing Russia from Central Asia to EU countries, first of all Austria and Germany. Its design capacity is 26-32bln cu m of gas a year. Construction will be completed by 2013.

The Nabucco consortium involves OMV Gas GmbH (Austria), Botas (Turkey), Bulgargaz (Bulgaria), SNTGN Transgaz S.A. (Romania), MOL Natural Gas Transmission Company Ltd. (Hungary) and RWE (Germany).

Initially the Nabucco pipeline project, presented in 2004, envisaged gas supply from Iran's fields in the Persian Gulf. In 2006, due to the conflict over Iran's nuclear program it was decided to change the project so that to be able to deliver gas from Turkmenistan, Uzbekistan and Azerbaijan.

The correspondent can be contacted at [email protected]

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