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Who will build Trans-Caspian gas pipeline?

Oil&Gas Materials 14 November 2014 17:18 (UTC +04:00)
The issue of the need to diversify the sources and routes of gas supplies to Europe is very relevant and on everyone's lips in recent years.
Who will build Trans-Caspian gas pipeline?

Baku, Azerbaijan, Nov.14

By Emil Ismayilov - Trend:

The issue of the need to diversify the sources and routes of gas supplies to Europe is very relevant and on everyone's lips in recent years. However, making ideas become real is important, and in this regard, Azerbaijan has succeeded enough.

In particular, Trans-Anatolian Gas Pipeline (TANAP) and Trans Adriatic Pipeline (TAP), which are the constituent elements of the Southern Gas Corridor, will be built within the framework of 10 billion cubic meters of gas supply on the European market in the second stage of the Shah Deniz field development.

Namely Azerbaijani gas is considered as the main source for the Southern Gas Corridor, which has great potential both for the supply of gas from other Azerbaijani deposits and other countries. The possibility of Middle Eastern and Mediterranean sources' joining the project is not ruled out. Turkmenistan can also be considered as an additional source of gas.

Thus, Turkish President Recep Tayyip Erdogan, after the recent talks with the head of Turkmenistan Gurbanguly Berdimuhammadov in Ashgabat, said that TANAP, which will ensure transportation of Caspian gas through Turkey till its borders with Europe, could count on Turkmen gas supplies to Europe as well.

The commissioning of TANAP will take place in 2018. The initial capacity of the pipeline is expected to be 16 billion cubic meters with the possibility of reaching 31 billion cubic meters per year in 2026.

"TANAP may transport gas both from Azerbaijan and Turkmenistan to Europe through Turkey's territory," Erdogan said.

Following the high-level negotiations held on Nov.7, Turkmenistan's Turkmengaz State Concern and Turkish Atagaz company even signed a framework agreement on cooperation in purchasing and selling of natural gas.

Prior to this, following the high-level talks in Ashgabat in July 2013, the governments of Turkmenistan and Turkey also signed a framework agreement on cooperation in supplying Turkmenistan's natural gas to Turkey and further to Europe.

In 1999, Turkey and Turkmenistan agreed on supplying 15.6 billion cubic meters of gas and signed a corresponding contract.

The construction of a 300-kilometer gas pipeline under the Caspian Sea to the coast of Azerbaijan is regarded as the best option for ensuring the delivery of Turkmen energy resources to European market.

Further, Turkmen hydrocarbons can be delivered to Turkey which borders the European countries.

The main parties of the negotiations on the Trans-Caspian gas pipeline are the EU and Turkmenistan. The tripartite negotiations on this project between the EU, Azerbaijan and Turkmenistan started in September 2011.

Azerbaijan, as a transit country, has repeatedly declared its readiness to provide its transit capabilities in the presence of an agreement between two parties (the EU and Turkmenistan).

In principle, the Trans-Caspian gas pipeline project can be beneficial for all parties, but most of all it is needed by the EU and Turkmenistan. Its construction will actually mean deepening of the Southern Gas Corridor, which serves for diversification of the sources of gas supply to the EU, and expansion of the corridor resource base.

Turkmenistan, which is rich in gas resources, will gain access to a new and alternative market. At the same time this project's realization will allow Azerbaijan to utilize its own transit opportunities and generate additional revenues.

Turkey, along with benefits from the transit of Turkmenistan's gas, will also get an access to an additional source of gas imports.

The main question remains: who will construct the gas pipeline?

The EU and Turkmenistan have to undertake the main costs of the pipeline's construction, given their greater interest in the project's realization.

Azerbaijan and Turkey, which will act as transit countries may take part in the project by carrying out works on preparation and expansion of gas transportation infrastructure on their own territories.

However, reaching a consensus on this issue could play an important role in the formation of a new and major competitor in the international gas market, that is, the Caspian gas.

Edited by SI

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