Azerbaijan, Baku, Dec.14 / Trend, E.Tariverdiyeva, A.Badalova /
Europe's energy security has become more actual in recent years. Today, the EU supports implementation of projects on diversifying gas supply sources. The Caspian region, particularly Azerbaijan plays significant role in this process.
In turn, annual increase in gas production, discovery of new fields, availability of a large number of prospective gas structures, and most importantly - proven gas reserves offer promising new sales markets for the region.
Ariel Cohen, Leading expert of the Heritage Foundation for Russian and Eurasian Studies and International Energy Policy, member of Trend Expert Council:
The Caspian nations, especially Azerbaijan, are actively working towards developing their hydrocarbon resources on, and off shore. The massive September gas and oil find off the coast of Azerbaijan will benefit the geopolitics of the entire region. However, Turkmenistan's commitment of gas reserves to China raises questions about its potential for Europe's energy supply. Europe sees Caspian energy as a possible alternative to the continent's Russia-dominated gas market, but a direct and stable transport system, such as the Southern Corridor, has been elusive. To construct such as system, a commitment from regional leaders, Europeans, Americans, and international and regional financial institutions, such as the World Bank, EBRD and the Asian Development Bank, In the longer term, gas exports will increase from this region, and diminish the geopolitical clout of current market leaders.
Europe's demand will depend on its financial and fiscal health. The sooner these issues are resolved in a sustainable fashion, the better are the chances for economic growth. Recently, the most interesting development has been the emergence of shale gas and oil as realistic energy sources. Development of shale gas in European countries such as Poland, Ukraine, Romania, and possibly others, will allow for domestically produced and environmentally clean alternatives. The U.S. Energy Commission has reported that Poland Alone has 5.3 trillion cubic meters of gas. Though it may take up to a decade, shale is Europe's best shot at gas sources diversification - after the Caspian gas, of course.
Russian State Duma member and President of Russian Gas Society Valery Yazev:
The Caspian countries, especially Kazakhstan and Azerbaijan, demonstrate strong growth rate in natural gas production. Their domestic consumption is also rapidly growing. However, power generation per capita in these countries is still noticeably inferior to the industrialized countries, therefore, domestic consumption of energy resources will also grow here.
It is projected that by 2035, annual gas consumption in the European Union will increase by 150-200 billion cubic meters. If to believe to these forecasts, Azerbaijan, Kazakhstan and Turkmenistan together will increase gas production by approximately 100 billion cubic meters. At the best European market will get only a third of this volume. As a result, the share of gas supplies to the European market will be low that will not play a decisive role in Europe's energy security.
Therefore, "Nabucco" gas transport project is a tangled skein of political problems in perspective. If it is built, it will not significantly affect Europe's energy security. At the same time, continental natural gas suppliers - Azerbaijan and Turkmenistan - have a great opportunity for multi-vector export of natural gas. With integration of world gas markets, swap supplies will increasingly gain ground, which will positively impact diversification of gas supplies to Europe, and, most importantly, improving trade balance of the Caspian states.
I think in the long run, the Caspian states will address issues regarding their own socio-economic development, ensuring their energy security, as well as political stability in the region. With regard to gas export, the energy markets of South Asia and Turkey may be more attractive than the European ones. I do not rule out that also the Russian market will be very interesting for gas supplies in the medium term, especially when the domestic gas prices in Russia become equally profitable with export prices.
Director of the Russia-Eurasia Center of the Council on Foreign Policy of Germany, Trend Expert Council Member Alexandr Rahr:
What surprises me is that over the last year no decision was taken on gas supplies from the Caspian region to Europe. There was no decision on "Nabucco", there was no decision on the Trans-Caspian pipeline. Incidentally, Trans-Caspian pipeline project was discussed at the OSCE summit a year ago, but it did not move forward over the last year. It can be assessed differently. On the one hand, it may no longer be so important for the EU, or, on the contrary, the Caspian countries have not yet decided how to get the most favorable conditions. A liquefied gas revolution took place in 2011. However, it will not replace pipeline gas.
Perhaps, the decision is being postponed also because nobody knows how natural gas market will be, gas prices remain quite high. On the other hand, Europe has already diversified purchase, it receives liquefied gas and develops oil shale fields. It is not yet clear how much gas from the exporters Europe will need in the future, the delay in issue regarding hydrocarbon supply will continue. In 2011, the European market was impaired. The largest economy - Germany - wants to cover the vacuum formed after rejection of nuclear energy with alternative energy sources. Today it is one of the main directions of German industry. Most likely, this situation will continue next year.
Editor-in-chief at Eurasia Energy Observer Andrej Tibold
The year of 2011 is, of course, unfortunately, characterised by the Fukushima catastrophe. As a consequence, many countries are revising the role of nuclear energy within their energy mix. In Europe, this has especially affected Germany, which has decided to phase out nuclear energy by 2022. Although Germany plans to significantly increase the share of renewable energy, gas will inevitably play a more important role, since it is the only low carbon alternative that serves as a back up and complementary source of energy to renewables. In general, as an energy source, gas has gained in importance, including Caspian gas. 2011 was also expected to be finally the year that a final investment decision on Shah Deniz-2 was expected to be taken. However, the consortium has again postponed its final investment decision, which has led to much disappointment among European companies involved in the Southern Corridor.
The Southern Corridor still remains the EU's main objective to diversify energy supplies. Slow progress with regard to the Southern Corridor, is pushing for the EU to look for alternatives as well. In this regard, Caspian gas producers should also be aware of the fact that the EU market is increasingly regarding LNG as an important alternative source of supply. So, in the short term Caspian gas could compete with LNG. Nevertheless, in the long-term Caspian gas will be a substantial source of supply.
Head of "Global Issues" research group in German Institute for International and Security Affairs Friedemann Müller:
The Caspian region is one of very few regions in the world which still can increase its oil and natural gas production. Insofar it plays an important role and the oil consumers in Europe and Asia are looking at the Caspian supply pattern. Europe feels the competition with China and the Russia's interests to keep Europe out from the Caspian hydrocarbon supply. Therefore, Europe has mixed feelings about the development in 2011.
The diversification of European oil supply is, for the time being, ok. Kazakhstan and Azerbaijan play a decent role in it. The diversification of natural gas supply, however, is a scandal.
Europe being the largest import market worldwide and being in the favourable position of having 70 percent of global natural gas reserves within a distance around Europe that can be reached by pipelines has two suppliers - Russia and Algeria - that cover more than 80 percent of European imports.It would make a lot of sense to have a competitive supply structure on the European market which is not the case currently. Most of all the largest import market of the world needs access to the largest reserve region of the world which is - as I call it - the South Caspian region going down to the Persian Gulf.