Central Asia has chances to join SGC – expert

Central Asia has chances to join SGC – expert

Baku, Azerbaijan, June 22

By Leman Zeynalova – Trend:

Central Asian gas has chances to become additional source for the Southern Gas Corridor (SGC) project, but some issues need to be resolved before that, Bruce Pannier, US expert on Central Asia and energy issues, told Trend June 22.

“Including Central Asia in the Southern Gas Corridor has been the EU policy for almost a decade. Representatives from Kazakhstan, Turkmenistan, and Uzbekistan attended the EU summit in Prague in May 2009 when the “Southern Corridor – New Silk Road” project was unveiled,” recalled the expert.

Pannier noted that to export large quantities of Central Asian gas a pipeline need to be built to connect Central Asia to Europe.

The best option is the Trans-Caspian pipeline, but the legal status of the Caspian Sea need to be resolved for that, he added.

Pannier believes that Turkmen gas can easily become a source of gas for the Southern Gas Corridor.

“Turkmenistan has the largest gas reserves in Central Asia, fourth largest gas reserves in the world and the distance between Turkmenistan and Azerbaijan across the Caspian Sea is not far,” the expert noted.

Kazakhstan and Uzbekistan could contribute some of their gas to such a pipeline, Pannier believes.

In general, an extra consumer, especially one like the EU, would be welcome to any of the Central Asian countries, he said.

“First, the extra revenue, which all of them would welcome. But second, the more customers you have the more leverage you have in bargaining,” said Pannier, adding that Turkmenistan can serve as an example in this regard.

“Having lost both Russia and Iran as customers, Turkmenistan is now only selling gas to China. If China wants to lower the price it pays for Turkmen gas, there is not much the Turkmen government can do. If Ashgabat says it won’t lower the price and Beijing says it won’t buy any gas from Turkmenistan that means Turkmenistan would not have any money coming in at all. It would be disastrous,” he explained.

Pannier added that if Turkmenistan still sold gas to Russia and Iran, Ashgabat could tell Beijing, “Russia and Iran buy our gas for, let’s say, $200 per 1,000 cubic meters, and we won’t sell for less than that” - a much better position to be in.

The same would be true for Kazakhstan and Uzbekistan should they ever start exporting large amounts of gas, he noted.

Recently, the European Council has said in its conclusions on the EU Strategy for Central Asia that the EU will continue to seek to extend the Southern Gas Corridor to Central Asia, and to further promote the EU's multilateral and bilateral energy cooperation.

The Southern Gas Corridor is one of the priority energy projects for the EU. It envisages the transportation of gas from the Caspian 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, the 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.

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Follow the author on Twitter: @Lyaman_Zeyn

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