Lifting of sanctions from Iran to help expand Southern Gas Corridor

Oil&Gas Materials 27 May 2015 16:51 (UTC +04:00)
Lifting of the sanctions imposed on Iran will allow to expand the Southern Gas Corridor.
Lifting of sanctions from Iran to help expand Southern Gas Corridor

Baku, Azerbaijan, May 27
By Elena Kosolapova - Trend:

Lifting of the sanctions imposed on Iran will allow to expand the Southern Gas Corridor, Alexey Gromov, head of Energy Department, Institute for Energy and Finance of Russia told Trend May 27.

Given the speedy adoption of necessary decisions by the US lawmakers to prepare a legal ground to lift the sanctions, it is highly likely that the sanctions on Iran will be lifted in the near future, said the expert.

He added that lifting of sanctions from Iran would pave way for the country to supply gas to Europe.

'The European market is the most attractive one for Iranian gas," said Gromov. "In this regard, it is highly likely that considerable volumes of Iranian gas can be delivered to the European market."

The expert added that the most likely route for delivering Iranian gas to Europe is the Southern Gas Corridor.

The Southern Gas Corridor can be expanded by approximately twofold and its capacity can increase from 10 billion cubic meters planned in accordance with the agreements, to 20 billion cubic meters, said Gromov.

The initiative to deliver Iranian gas to Europe will be mutually supported, said the expert, adding that at the same time, in order to implement this project, Iran will need to agree with the transit countries - Turkey and Azerbaijan.

As for the possibility of delivering Turkmen gas to Europe, the situation here is more difficult, according to Gromov. The recent statements by the officials of the European Commission on the intentions to get Turkmen gas in the coming years, are a simple political rhetoric and for present are not based on real agreements, he added.

Turkmen gas can be delivered to Europe through two routes, he said. The first is the Trans-Caspian gas pipeline through the bottom of the Caspian Sea and its connection to the Southern Gas Corridor and the second option is the delivery of Turkmen has though Iranian territory and further to the Southern Gas Corridor system again, said the expert.

He said the construction of the Trans-Caspian Gas Pipeline would be blocked by the unresolved legal status of the Caspian Sea, because with the sea's unresolved status the economic risks of the project will be high.

At the same time, the expert said, with the supply of the Turkmen gas through Iran, this gas will be a direct competitor of Iranian gas.

Gromov went on to add that Iran will be interested in supplying its gas to the European market, and will not be interested in letting competitors enter there.

The expert noted that for Turkmenistan it is very important to diversify its supplies, and to send its gas not only eastwards, but also westwards.

"But at the same time, it [Turkmenistan] is regularly increasing gas supply to China, and earlier Turkmenistan and China inked a contract for the supply of 65 billion cubic meters of natural gas per year by late 2021," said Gromov.

"Thus, there can come a time when China will take all the Turkmen gas in line with the contractual obligations," he added.

The Southern Gas Corridor is one of the priority energy projects for the EU. It envisages the transportation of gas from the Caspian Sea region to the European countries through Georgia and Turkey.

At the initial stage, the gas to be produced as part of the Stage 2 of development of Azerbaijan's Shah Deniz field is considered as the main source for the Southern Gas Corridor projects. Other sources can also connect to this project at a later stage.

As part of the Stage 2 of the Shah Deniz development, gas will be exported to Turkey and European markets by expanding the South Caucasus Pipeline and the construction of Trans-Anatolian Natural Gas Pipeline and Trans-Adriatic Pipeline.

Edited by CN

Follow the author on Twitter: @E_Kosolapova