The share of liquefied natural gas (LNG) in the world's gas supplies will increase from nine percent in 2010 to 15 percent in 2030. These forecasts are contained in the BP Energy outlook 2030 . The share of LNG in total gas imports to Europe will increase from 30 percent in 2010 to 42 percent in 2030.
Three events followed each other in early June: Ministerial meeting on the Azerbaijan-Georgia-Romania Interconnector project in Bucharest, the 18th International Caspian Oil & Gas Exhibition & Conference Incorporating Refining and Petrochemicals in Baku, and Azerbaijani President Ilham Aliyev's official visit to Belgrade. Each of these events are directly or indirectly related to the Azerbaijan-Georgia-Romania Interconnector (AGRI) project.
The AGRI project envisages transporting Azerbaijani gas via pipelines to the Black Sea coast of Georgia, where the gas will be liquefied at a special terminal. The gas will then be delivered to a terminal at the Romanian port of Constanta using tankers. Later, the liquefied gas will be brought into the state of natural gas and directed towards covering the needs of Romania and other European countries. Participants of the project are Azerbaijani SOCAR, Oil and Gas Corporation of Georgia, the Romanian ROMGAZ and Hungarian MVM. Each has a 25 percent shareholding.
The representatives of Azerbaijan, Georgia, Romania and Hungary expressed full support for AGRI, which envisages supply of the Caspian liquefied gas through the Black Sea coast of Georgia to Eastern Europe. "Representatives of the four countries stood for rapid start of the preparation of the AGRI project's feasibility study (FS) at the ministerial meeting," member of AGRI LNG Co managing team Vitaly Beylarbeyov said. He said the countries' representatives were familiarized with presentations of commercial companies of Japan, Norway, Turkey, Korea and France, which expressed a desire to prepare the feasibility study of AGRI during the ministerial meeting.
Currently, the main target in the implementation of gas transportation project Azerbaijan-Georgia-Romanian Interconnector (AGRI) is to prepare a feasibility study (FS), the Minister of Industry and Energy of Azerbaijan Natik Aliyev said earlier. Aliyev said there are two options for funding the feasibility study. The first option is the European Union, which as an interested party may provide funds as a grant to prepare a feasibility study. The second option - if a private organization that plans to continue to finance the project, will provide a grant.
Participants of the Azerbaijan-Georgia-Romania Interconnector (AGRI) pipeline project will themselves fund the preparation of a feasibility study for the project, a senior representative of the State Oil Company of the Azerbaijan Republic (SOCAR) said. "All companies-participants in the project are willing to finance the preparation of the feasibility study. The project involves four companies and, accordingly, the cost will be divided into four parts," the source said. The amount of funds required to prepare the feasibility study, will be known after the submission of proposals to the design company that will won a tender to be announced soon. The tender results will be announced in late summer. Accordingly, the project participants expect to receive a feasibility study in February-March next year.
Perhaps the EU is interested in the AGRI project not to the extent that it is interested, for example, in the Nabucco project. Perhaps a private company has not been found yet for which the prospects of the project are obvious. But the fact that participating companies have decided to fund the feasibility study tells about the seriousness of their intentions.
The idea to deliver LNG to the Black Sea region, particularly to the Balkans, seems attractive on the backdrop of several factors. Firstly, AGRI will be the first such project, and always has the advantage (if, of course, correctly calculate all). Secondly, LNG supplies from other regions such as North Africa or the Middle East are difficult because of the heavy Turkish sea channels and the lack of alternatives increases the dependence of these countries on the gas supplies from Russia, making it a monopoly. As known it is irritating the Europeans. In 2010, according to BP, the entire Romanian imports (2.15 billion cubic meters) accounted for Russian gas, and almost all imports of Hungary, except 0.3 billion cubic meters from Germany and 0.7 billion from France, also came from Russia (6.47 billion cubic meters).
Continuity of supply from Russia is also not an indisputable fact, given the Russian-Ukrainian relations around the Ukrainian gas transport system and the events in winter 2009. Third, Azerbaijan has established very good relations with potential buyers at political level, and this fact is of great importance, because predictability and confidence are needed for long-term partnerships.
In addition, this project, along with others, is desirable because of the growing needs of European markets for gas. It is projected that by 2020 Europe's gas needs will amount to an additional 80 billion cubic meters, and further this figure will grow. "Europe passed a phase of economic crisis. Over time the demand for energy will increase," the head of the EU delegation in Baku Roland Kobia said at the oil and gas conference in Baku on opportunities to maximize the energy cooperation between Azerbaijan and the EU.
According to the ambassador, the world witnessed how the catastrophe at the Fukushima nuclear power plant affected on energy resource distribution structure among many countries, as it became necessary to replace a large part of the produced nuclear energy to another form of energy. The alternative is renewable and gas energy sources. Gas has certain advantages, including easiness of production. "Taking into account this situation, we need ambitious projects that would deliver gas from the exporting countries to the EU market" Kobia said.
The European Union aims to achieve long-term gas cooperation with Azerbaijan in 2011, EU Commissioner for Energy Gunther Oettinger said in Baku. These and other statements made at the conference in Baku meant realization of the Southern Gas Corridor projects, but they are quite applicable to the AGRI projects as well.
Azerbaijan has large gas reserves. Addressing the Oil and Gas Exhibition in Baku, President Ilham Aliyev said: "Given that the oil reserves in the country have twice exceeded the initial projections, with full confidence I can say that the gas reserves of 2.2 trillion cubic is a modest figure. The forecast is at least twice more, and I am confident that as a result of drilling, gas will be discovered in a larger scale. " Gas production in Azerbaijan will increase in coming years, it seems will increase sharply, and then new markets will be necessary. "We need new large markets, which are regulated by law and where there is demand for our gas," Azerbaijan's President said in his speech in Baku.
Finally, the Balkan region is geographically closest market, in addition to existing ones, for the sale of Azerbaijani gas, and here another potential buyer within the AGRI project could be Serbia. It was to take shape during Azerbaijani President's visit to Belgrade. "Serbia has a strategic interest in this matter. Serbia wants to join the project and we discussed with Mr. President this question. Now we once again expressed our will to join the project. Serbia intends to diversify its sources of gas supplies, and Azerbaijan is one of our wonderful, long-term partners," President Boris Tadic said in Belgrade in a joint press statement.
President of Azerbaijan also expressed his opinion on Serbia's participation in the AGRI project: "We are very pleased to welcome the initiative of Serbia to join the AGRI project. We really would like Serbia to join this project, considering that at present the rich hydrocarbon resources of Azerbaijan are transported to various markets, and we are very interested in new markets."
Thus, the mutual interest of both countries can be completed with that the AGRI project participants will become more. This will improve its economic viability, and hence the chances of implementation.