Strife for European gas market

Oil&Gas Materials 15 May 2015 16:51 (UTC +04:00)
The Southern Gas Corridor project’s realization, which is proceeding at a quick and steady pace, has led to an increase in the EU’s efforts to connect other gas sources to this project.
Strife for European gas market

Baku, Azerbaijan, May 15

By Aygun Badalova - Trend:

The Southern Gas Corridor project's realization, which is proceeding at a quick and steady pace, has led to an increase in the EU's efforts to connect other gas sources to this project.

Today, no one doubts that Azerbaijan's gas will be the first alternative source of supply for the EU.

But one alternative source is not enough for ensuring a higher energy security in the long term. And the EU understands that it is time to take the opportunity provided by Azerbaijan.

The talks on the delivery of Turkmenistan's gas to Europe have intensified in recent months. And even a working group was created to promote the issue. However, Turkmenistan is not the only potential supplier of gas to Europe. Iran and Iraq are also named as potential sources.

The EU has repeatedly said the gas from Northern Iraq may also be delivered to Europe. In turn, Azerbaijan, which is the initiator of the Southern Gas Corridor, also invited Iraq to join it.

Gas from Northern Iraq was considered as a resource base for the Nabucco project at the time. In 2010, German RWE company, a shareholder of this project and Kurdistan Regional Government in northern Iraq signed a cooperation agreement that further envisaged signing contracts for gas supply from this region to Europe. However, this agreement was considered illegal by Iraqi authorities.

Iraq's proven gas reserve as of early 2014 stood at 3.6 trillion cubic meters, according to BP. The oil production in the country totaled 600 million barrels in 2013.

Around three quarters of Iraq's proven gas reserve is concentrated in the fields in the country's south, according to the US Energy Information Administration (EIA). Only over 20 percent of this gas is concentrated in the non-associated fields in Iraq's north. Namely this gas was considered as a prospective source for export to Europe.

More than a half of the gas extracted in Iraq is burned. This is due to lack of the necessary infrastructure for its transportation for both domestic consumption and export. The incompressible gas is mainly used for re-injection into the oil wells to increase the oil extraction speed.

Today, there are all prerequisites, in particular infrastructure, to supply Iraqi gas to Europe. A missing part is only the gas pipeline from the Iraqi-Turkish border to one of the Turkish provinces - Erzurum and Erzincan. It could be further connected to the Trans-Anatolian pipeline which will be connected with the Trans-Adriatic Pipeline (TAP) to supply the resources to Europe.

TANAP and TAP are originally designed for Azerbaijani gas. Both of them are able to expand their capacity to transport gas from other sources.

Turkey and northern Iraq have an agreement on the supply of gas, which is scheduled to begin in 2017. The initial gas volumes will be about 4 billion cubic meters. It is planned to increase these volumes to 20 billion cubic meters by 2020.

Transportation of Iraqi gas to Europe is in the interests of all parties involved, namely Iraq, which will be able to enter the global market having large reserves and potential, Europe, which will receive additional volumes of alternative gas, and Turkey, which will become a major transit center in the chain of gas supply to Europe.

Edited by SI


Aygun Badalova is Trend Agency's staff journalist, follow her on Twitter: @AygunBadalova