Trans-Caspian Pipeline: Who wants to turn it into reality?

Oil&Gas Materials 29 November 2013 18:11 (UTC +04:00)

Baku, Azerbaijan, Nov. 29

By Aygun Badalova - Trend:

The Trans-Caspian gas pipeline project -- years in the planning -- which offers the EU a chance to diversify its energy supplies, has once again become the topic of wide discussions.

The EU's representative has recently said that at this point all conditions seem favourable to conclude an agreement for the construction of the Trans-Caspian Gas Pipeline.

"The Trans-Caspian pipeline is important and the EU believes there are now the favourable conditions to reach an agreement and begin construction," the EU's interim Charge d'Affaires in Turkmenistan, Denis Daniilidis said.

There could be a number of reasons behind this statement. First is the recent announcement by Turkmenistan about the existence of greater gas reserves in the country's largest gas field, Galkynysh field. Total resources at Galkinish and nearby fields are estimated by local geologists and the GCA British Company to be around 26.2 trillion cubic meters.

The existence of enormous gas potential in Turkmenistan gives the EU grounds to consider the country as a source of additional gas supplies.

The second cause for the EU to reinforce efforts towards the implementation of the Trans-Caspian pipeline project is the opening of the Southern Gas Corridor - the project which will give opportunities to Europe to diversify its sources of hydrocarbon supplies and increase its energy security. This year was very important in terms of making key decisions within this project. In particular, the Trans Adriatic Pipeline (TAP) was selected by the consortium of Azerbaijani Shah Deniz field development as the route to transport its gas to European markets.

The Joint Declaration of the 3rd Eastern Partnership Summit, adopted in Vilnius on Nov. 29, stressed the key developments towards the opening of the Southern Gas Corridor, including the planned modernisation of the South Caucasus Pipeline (SCP), TAP and the development of other gas transport infrastructures directly linking the Caspian Region with the EU.

The main supply source that is available for the Southern Gas Corridor at this time is the gas to be produced within the second phase of Shah Deniz field development. However, the European Commission has repeatedly said that it considers this project as a multisource one, and expects more Caspian gas, not just from Azerbaijan, but also from other countries to be delivered to Europe by the Southern Gas Corridor.

In particular, as a source in the Energy Department of the European Commission earlier mentioned, the Southern Gas Corridor, including the Trans-Caspian Pipeline, remains a key policy priority for the European external energy policy.

The source stressed that delivering of Azerbaijani gas to Europe, (supplies are expected to start in 2019) will be only the beginning of the Southern Gas Corridor, as the EU expects the corridor to increase the transported volumes of gas from more countries in the Caspian region to Europe.

And lastly, the third reason for the EU to strengthen the negotiations process over the Trans-Caspian pipeline now, is the progress that has been recently achieved in Turkmenistan-Afghanistan-Pakistan- India (TAPI) gas pipeline, which to some extent can be considered as the competitor to the Trans-Caspian pipeline.

The service agreement for TAPI signed this week in Ashgabat with transaction advisor, the Asian Development Bank (ADB), as well as the Turkmengaz state concern, Afghan Gas Corporation, Interstate Gas Systems (Private) Limited (Pakistan) and Gail Limited (India) demonstrates the support and the will of the parties to implement this project. Around 33 billion cubic meters of gas per year are expected to be pumped from Turkmenistan to Afghanistan, Pakistan and India via TAPI. At stake are large volumes that the Eu can ill-afford to loose.

At this moment the conditions are really good and favourable to go ahead with the implementation of the Trans-Caspian pipeline project. And the EU understands it well and strongly supports the project.

The political will of the parties to implement the project is in place.

The European Commission said that negotiations to move the process forward have progressed, however the unresolved status of the Caspian Sea and the opposition of Russia and Iran to that project remains obstacles preventing šthe implementation of the project, some experts on this issue have stated.

The question now is whether the political will and support will be enough and whether the parties will be able to overcome the disputes over the maritime borders in the Caspian Sea.