Race for Caspian gas escalates

Trend news agency expert Seymur Aliyev

The struggle between the gas pipeline projects, designed to ensure the delivery of gas to the EU aggravates in terms of increasing importance of ensuring Europe's energy security and searching the alternative routes of gas supplies.

Today, Azerbaijan is the most real gas supplier on these alternative routes. It conducts a procedure of choosing the gas pipeline to deliver its gas. This process must be completed by the end of the first quarter of this year. This exacerbates the struggle between the consortiums of gas pipeline projects.

The struggle for Caspian gas becomes more acute after Turkey's decision to provide Russia with territorial waters for the construction of South Stream gas pipeline.

It should be noted that first of all, the route chosen for gas deliveries for Baku depends on its economic feasibility, effectiveness and prospects for natural gas markets, where the pipelines appear and attractive tariffs for gas pumping. Thus, first of all, the competition between gas pipelines is beneficial for the supplier - Azerbaijan. It determines a route for gas supplies.

At present, the most promising route of Azerbaijani gas supplies and other Caspian gas to Europe in future is the Southern Gas Corridor. Three major competing routes - the "Nabucco", ITGI and TAP pass through this corridor. The consortium of each of the pipelines thinks that its implemented route is the most optimal and cost-effective one to deliver gas to Europe.

"Nabucco" gas pipeline has recently given up its positions. It was considered as the favorite in the beginning of the race for Caspian gas. First, this route was more supported by the EU from the political point of view, and second, the project member-countries, which signed a declaration, supported for the pipeline at the state level.

"Nabucco" project proposes the largest volume of gas transportation - 31 billion cubic meters per year. It was presented as its advantage several years ago. But today this fact is one of the main disadvantages.

After 2017 Azerbaijan will be ready to deliver 10 billion cubic meters of gas to Europe. If this gas is transported through "Nabucco", it is not clear who will pay for the unfilled capacity of the pipeline. Thus, manufacturers will have to pay for pumping via the pipeline, using it by third. Unfortunately, the statements that the spare capacity of the gas pipeline will be filled with gas from other sources (Iraq, Egypt, Turkmenistan) do not have any real basis. Moreover, the cost of the pipeline remains open. It will definitely increase from the previously announced 7.9 billion euros. But the real figure is not clear.

ITGI and TAP pipelines are more interesting in this sphere. Their power hits 10 billion cubic meters per year with the possibility of further expansion. The cost of these projects - 1.5-2 billion and 1.5 billion euro respectively is also attractive. The crisis in the euro zone may be the main difficulty in implementing these projects. It hit such countries as Greece and Italy. The companies of these countries participate in ITGI and TAP.

The interest in the new route - the gas pipeline of south-eastern Europe (SEEP) also increases amid the long-discussed projects of the Southern Gas Corridor. SEEP was proposed by BP - the operator developing the "Shah Deniz" field in Azerbaijan. It should be the main resource base for the above-mentioned pipelines. This project involves the gas supplies in a volume of 10 billion cubic meters via the existing pipelines to Bulgaria, Romania, Hungary, Serbia, Croatia.

A new pipeline project - Trans-Anatolian Pipeline (TANAP) initiated by Azerbaijan and Turkey hit a painful blow to the "Nabucco" gas pipeline. The implementation of this project negated Nabucco's another advantage - the intention to build a branch of the gas pipeline to Turkey's border with Georgia. However, Baku and Ankara were involved in the construction of the gas pipeline from the eastern to the western border of Turkey, which practically equalized the chances of all the projects of the Southern Gas Corridor. Now they all will begin on the western border of Turkey.

"Nabucco" participants are Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE.

TAP project shareholders are Swiss company EGL (42.5 percent), Norway's Statoil (42.5 percent) and German E. ON Ruhrgas (15 percent).

Edison and Depa companies founded IGI Poseidon SA to design and construct the pipeline Greece-Italy, known as Poseidon.
The contract to develop Shah Deniz was signed June 4, 1996. Participants are BP (operator) - 25.5 percent, Statoil - 25.5 percent, NICO - 10 percent, Total - 10 percent, Lukoil - 10 percent, TPAO - 9 percent, and SOCAR - 10 percent.

Azerbaijan's desire to bring its gas to the European market remains unchanged. The routes of the Southern Gas Corridor are most attractive. But a kind of this pipeline to be chosen primarily depends on the participants of these pipeline projects. Therefore, it is important for them today to show their economic and political viability and financial solvency.

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