Trend commentator: Who must build new Caspian gas pipelines?

Trend commentator: Who must build new Caspian gas pipelines?

Azerbaijan, Baku, Oct. 30 / Trend E. Ismayilov /

Trend commentator Emil Ismayilov

The relations among countries in the production, export, transit and consumption of energy resources pass to a new level in today's market conditions. This process, in particular, is quite noticeable in the Caspian region.

Earlier, energy-producing countries in the region looked for the routes for their delivery to the world markets, created them for their own and borrowed funds. But today, this issue has become less relevant when countries diversify routes of supply of raw materials. Earlier the Caspian countries such as Azerbaijan, Kazakhstan and Turkmenistan were interested in the construction of new pipelines. At present stage, these countries choose perspective routes for transporting their resources. It requires a lot of efforts from buyers to attract Caspian gas and forces them to be initiators of new projects for the construction of gas pipelines.

Choosing the routes by energy-producing countries depends today on the economic side of the projects. That is, the countries of the region, primarily, guide by the principles of economic feasibility and maximal commercial benefit while determining the directions of transportation of their energy resources.

The most pressing issue today is to ensure alternative gas supplies to Europe, as well as energy security of the EU countries.

The operations to promote the construction projects of gas pipelines of the Southern Energy Corridor, including such routes as Nabucco, Turkey-Greece -Italy (ITGI), Trans Adriatic Gas Pipeline (TAP), White Stream were intensified especially after the gas crisis between Russia and Ukraine the previous years, through which Russian gas is delivered to Europe.

All these projects consider gas from Azerbaijan as a major primary resource base for gas pipelines.

But despite this, one can not say that Azerbaijan is in a hurry to implement the second stage of developing Shah Deniz field. It will raise production at the field up to 25 billion cubic meters. It is explained by the ongoing negotiations with potential buyers. Despite the fact that both Russia and Iran, are willing to buy all the volumes of gas within the second stage of developing Shah Deniz field, the Azerbaijani side is aimed specifically at the European market. Now, Azerbaijan chooses the directions and routes that are profitable to it, especially from an economic point of view.

It was necessary for the countries producing raw materials, in particular Azerbaijan, to first saturate the markets of the region and first of all, transit countries to ensure delivering of energy resources to the world markets. At present, the main demand for gas in Georgia is provided by Azerbaijani raw materials. Turkish market is saturated due to different sources of gas supplies, including from Azerbaijan.

Thus, the way for Azerbaijani gas to Europe is open in terms of providing regional markets.

However, there are new complications in this process. The contracts were concluded with national companies such as Botas, Oil and Gas Corporation of Georgia, fully owned by the state, in terms of gas supplies to the markets of the region. Moreover, the state is fully engaged in selling gas at the markets of these countries. It stipulates the country's commitment to purchase the contracted volumes. These contracts were supported by the intergovernmental agreements. It greatly increased international financial institutions' credibility. There were no problems with the financing of infrastructure projects, as a consequence.

Large private companies are involved in the process of creating the infrastructure and buying gas to provide gas pipelines amid the situation with the Caspian gas delivery to European market.

The Azerbaijani side at various levels has repeatedly stated that it supports realization of the new projects on construction of gas pipelines, but on condition that the companies participating in these projects must take decisive actions to find sources of financing and strengthen their activity on construction. In this case, Azerbaijan is ready to consider possible supplies of own gas.

It becomes clear that the party, most of all interested in new routes, must make the first and basic actions. In this case they are the companies from European countries developing various supply routes to the EU markets.

Now Europe does not have a significant deficit in gas. The amounts of products supplied to the markets at this stage, are sufficient to meet the needs of European consumers. However, a significant growth in consumption is forecasted in the future. Besides meeting this need, the main goal of the construction projects of new gas pipelines is to diversify both sources and routes of gas transportation.

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