Azerbaijan to satisfy Europe’s thirst for gas

Azerbaijan to satisfy Europe’s thirst for gas

By Vagif Sharifov

Trend

The demand for gas in Europe is expected to reach the 500 billion cubic meter per year mark by 2020, just as Azerbaijan begins it first large scale export of gas to the region.

The European Union is currently unable to produce the amount of gas it needs to maintain its economy on track and meet the huge demand required to run power plants, households and industry. Nor will it be able to do so in the future.

The EU's internal gas production by 2020 will be 135 billion cubic meters per year which is a little more than one fifth of its demand. Therefore in six to seven years the EU will have to import more than 70 per cent of is needs, or some 359 billion cubic meters per annum from various countries to maintain its economy.

Power plants will remain the major gas consumers within Europe, according to a number of statistics. Production of electricity which uses gas, grows every year in Europe and has been since 1996 up till today. Next in line as gas consumers are households and industry. These sectors are tightly connected with the economic situation and any change in the job market is reflected.

The good news for Azerbaijan is that pipelines will remain the primary source of gas transportation in the near future. This makes the country with three trillion cubic meters of gas reserves set to become one of the most stable gas suppliers for Europe via the planned Trans Adriatic Pipeline (TAP).

TAP's capacity is going to be 10 billion cubic meters of gas per year at the first stage and 20 billion on the second. TAP which would run from the Turkish-Greek border will face Azerbaijani gas flowing from the other pipeline - TANAP, otherwise known as the Trans-Anatolian gas pipeline. Gas for TANAP will be delivered by the existing South Caucasus Pipeline.

This pipeline system called the Southern Corridor, has the potential to meet up to 20 per cent of gas demand in the EU in the long term, said EU Energy Commissioner Günther Oettinger. Satisfying one-fifth of the EU's demand for gas for Azerbaijan translates into more than just a trivial business transaction.

Shareholders of Shah Deniz, which is the largest Azerbaijani gas field, agreed in Baku on Dec. 17 to invest an additional 25 billion dollars towards the project's development. The outcome of these huge investments is to create an additional 16 billion cubic meters of gas per year from the Shah Deniz field within a few years. It is planned to start exporting 10 billion cubic meters of gas per annum to Europe in 2020 and six billion to Turkey.

Among the shareholders of the Shah Deniz field with some 1.2 trillion cubic meters of gas are SOCAR, BP, Statoil, NICO, Total, Lukoil and TPAO.

During the ceremony marking the final investment decision of the Shah Deniz-2 project, mention was made of the various European countries that can expect to receive Azerbaijani gas. They include Albania, Greece, Italy, Croatia, Montenegro, Bosnia and Herzegovina, Macedonia, Slovenia, Bulgaria, Romania, Hungary and Austria. Many of these countries have a strong dependency on gas imports now. And furthermore there is no gas market or gas infrastructure in Montenegro.

The gas infrastructure which will be built for the Shah Deniz-2 project can be used effectively by the other perspective gas projects in Azerbaijan such as Absheron, Umid, Babek and Nakhchivan.

The Absheron's gas reserves are expected to be as much as 350 billion cubic meters. Drilling is expected to commence by the year 2017. Shareholders of Absheron are SOCAR, Total and Gaz De France Suez.

The Umid gas field was opened by SOCAR in 2010. Potential gas reserves of that field are expected to be more than 200 billion cubic meters. SOCAR is in the process of constructing a special offshore platform for this field's full development.

The other structure is called Babek with 400 billion cubic meters and Nakhchivan with 300 billion cubic meters of gas. The total reserves of the three Azerbaijani offshore gas fields Zafar-Mashal, Araz-Alov-Sharq, and Shafag-Asiman is estimated to be as much as 1.5 trillion cubic meters.

The Caspian Sea region where Azerbaijan shares the shoreline, is one of the oldest oil-producing areas in the world and is an increasingly important source of global energy production, the U.S. Energy Information Administration believes.

'The area has significant oil and natural gas reserves from both offshore deposits in the Caspian Sea and onshore fields in the region. Traditionally an oil-producing area, the Caspian area's importance as a natural gas producer is growing quickly', the EIA said in a report published on its official website.

According to the EIA's estimates, 2012 proved and probable reserves within the basins that make up the Caspian Sea and surrounding area amounted to 48 billion barrels of oil and 8.268 trillion cubic meters of natural gas.

In addition, the report stressed that the U.S. Geological Survey (USGS) estimates another 20 billion barrels of oil and 6.88 trillion cubic meters of natural gas as being as yet undiscovered, technically recoverable resources.

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Vagif Sharifov is an energy specialist with Trend Agency in Baku, Azerbaijan.

Edited by SM

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