Which factors to push Europe’s gas demand high?

Which factors to push Europe’s gas demand high?

Baku, Azerbaijan, Jan.28

By Leman Zeynalova – Trend:

Natural gas demand in Europe will continue to increase in the next ten years, Head of Economic Research at Italy-based Sogefi Group and expert in European Energy Policy Luis Colasante believes.

“The needs of natural gas import in Europe will continue to increase in the next ten years due to substantial shift with Netherlands and UK turning from gas exporting to gas importing countries and Norway pursuing an energy policy to freeze any oil and gas projects,” the expert told Azernews.

He pointed out that after a 7 percent growth seen in 2016, European gas consumption continued to be on rise in 2017. Consumption showed a year-on-year increase of 6 percent in the first quarter when it was supported by low temperatures, added Colasante.

Further, the expert noted that one of the targets of Europe is to be less independent from Russian gas. In this context, he stressed the significance of the Southern Gas Corridor project, which envisages transportation of Azerbaijani gas to Europe.

“The Southern Gas Corridor is the most important infrastructure pipeline project worldwide concerning the supply of Caspian gas to Europe,” said Colasante, adding that the major part of the project has already been completed, which is great news not only for Europe, but also for the Azerbaijani economy, as it will allow increasing its GDP.

Azerbaijan, which is being tracked as a gas player, will also have an essential role to play as a European partner with stable economy, the expert believes.

Commenting on the possibility of rivalry between the Southern Gas Corridor and Russian gas projects, Colasante said the Southern Gas Corridor will not replace the Russian gas, but it will be an outstanding factor for the south European countries that are supplied with liquefied natural gas (LNG) which has a higher shipping cost.

The expert also commented on the issue of rivalry between Southern Gas Corridor and Russian-initiated TurkStream project.

“From my standpoint, the TurkStream project will not be a competitor of the Southern Gas Corridor, which is considered as a priority for the European Commission,” he said.

TurkStream project concerns several political and legal issues such as energy security and European energy strategies (aimed at independency from Russian gas).

“Long negotiations will need to be held between Russia and Europe in the following months and years. Unless Russia has no any ironclad guaranty from the European Commission, the project will not be launched,” he added.

The Southern Gas Corridor, worth $41.5 billion, 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.

TurkStream project envisages construction of two branches of the main gas pipeline under the Black Sea, the capacity of each branch being 15.75 billion cubic meters of gas.

One branch is meant to supply gas directly to the Turkish market and the other for the supply of gas by transit through Turkey to Europe. The intergovernmental agreement between Russia and Turkey also stipulates that these two offshore branches should be built by December 2019.

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Follow the author on Twitter: @Lyaman_Zeyn

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