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Trend commentator: Time to move from words to actions over Southern Corridor project

Oil&Gas Materials 5 June 2010 15:30
All projects implemented under the Southern Corridor share the common feature - they all are designed for gas from the Caspian region, more precisely the gas from Azerbaijan. If the Nabucco project is considered to supply several sources (Iraq, Azerbaijan and Turkmenistan), the implementation of other projects (ITGI, TAR) depends only on the Azerbaijani gas.
Trend commentator: Time to move from words to actions over Southern Corridor project

Azerbaijan, Baku, June 4 /Trend/

Aygun Badalova, Trend commentator  

All projects implemented under the Southern Corridor share the common feature - they all are designed for gas from the Caspian region, more precisely the gas from Azerbaijan. If the Nabucco project is considered to supply several sources (Iraq, Azerbaijan and Turkmenistan), the implementation of other projects (ITGI, TAR) depends only on the Azerbaijani gas.

The Southern Corridor project, designed to diversify supply routes to Europe, as well as the value and importance of the Caspian region, particularly Azerbaijan, in its implementation became a major topic of discussion at the Caspian International Oil & Gas Conference this week in Baku. The meeting was attended by representatives of projects realized under the Southern Corridor, particularly Nabucco, ITGI and TAP.

Elio Ruggeri, head of the International Gas Infrastructure at the Italian Edison Company - participant of ITGI, said to conference that today Azerbaijan is the only potential gas supplier gas to the European markets. The realization of the ITGI project and putting the gas pipeline into operation in 2015 depend on Azerbaijani gas, particularly on gas produced in the second stage of Shah-Deniz project, he said. "We are ready to buy Azerbaijani gas, which the country can offer us, and are ready to deliver it to the European market," said Ruggeri.

The representative of the EGL Company, which is a shareholder to the TAP project, also noted the importance of Azerbaijan's role in the energy supply to Europe. According to him, TAP is a project that has the best way to ensure the interests of consumers and producers.

At present, gas supplies from other sources via these pipelines within the Southern Corridor seem unrealistic due to such factors as, for example, lack of infrastructure (from Turkmenistan to Azerbaijan) or safety (the unstable situation in Iraq), so the increased interest in the Azerbaijani gas is quite understandable.
Nevertheless, despite the active discussions, the implementation of the concept of the Southern Corridor still seems vague. In addition to doubts about the filling of gas pipelines, financing their construction is under the big question. Such a large and complex projects as Nabucco, the start of construction of which is scheduled for 2011, still requires signing several agreements, including with potential lenders, which, in turn, waiting for assurances to fill the pipeline.

Lack of investment decisions on projects is the main obstacle to their advancement, because today the projects are not progressed for further discussions and approval of their implementation and commercial benefits for producers, which in reality do not need it. Such gas suppliers as Azerbaijan, which is also eager to diversify its export routes, definitely will choose from all options one that will yield the greatest commercial benefits. But more important is the existence of the choice. At present, all projects of the South Corridor are almost at the same stage and gas suppliers who are interested in them, particularly Azerbaijan, can only wait.

"Once an investment decision on the Nabucco, TAP or ITGI will be made, SOCAR will begin negotiations with the shareholders of these projects," an official representative of SOCAR said earlier.

Thus, the shareholders of the Southern Corridor project should move from words to action that would ensure their timely implementation. Indeed, given the actual orientation of all these projects to a single and a potential source, the beginning of the realization of one of them can lead to a substantial loss to others.

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