South gas corridor: intrigue continues

South gas corridor: intrigue continues

Baku, Azerbaijan, Oct. 25 /Trend/

Azer Ahmedbeyli, expert of Trend's analytical department

Little time has left to the moment when the Azerbaijani government will authorize the launch of the second phase of the Shah-Deniz field development. Representatives of the projects designed to deliver Azerbaijani gas to Europe one after another visit Baku to negotiate with the country's leadership to mention the advantages of their suggestions before the final transportation route is chosen. Following the President of Austria who recently visited Baku and spoke in support of the Nabucco project, the Energy Minister of Greece George Papaconstantinou arrived in Baku.

Greek Minister of Environment, Energy and Climate Change George Papaconstantinou stated at a press conference that the ITGI system is the most profitable solution for the Shah-Deniz consortium, Azerbaijan, EU and Greece. "This is the best project from economic and technical points of view," he said, adding that the ITGI project is of strategic importance for Azerbaijan and Greece. The project promotes the strategic relations between the two countries. The project will make Greece the gateway for the Azerbaijani gas to Europe. He noted the importance of making a quick decision on the transportation route. "There are also other pipeline projects on the table which can become a reality in the medium-term," he said. "ITGI is the bankable project to start immediately," he said.

Regarding the fiscal difficulties that Greece is facing today, Papaconstantinou said they will not affect the realization of the ITGI project.

DEPA CEO Harry Sachinis said to press conference that Azerbaijan is very important for Europe, especially for the Southern Eastern Europe. "The country is very important for the diversification of gas supply to this region," Sachinis said.

Meanwhile, things happen that can change the configuration of positions before choosing the route and influence the decision of the Shah-Deniz consortium. Until now, the priority was owned by the Nabucco gas pipeline, supported by many European countries, particularly by the United States. Prime Minister of Ukraine Mykola Azarov's statement on the agreements between Kiev and Moscow, made a few days ago, and possible future developments can not only select this priority, but completely deny the urgency of the Nabucco project.

Last week Ukrainian Prime Minister Mykola Azarov said that Moscow is ready to allow Kiev to use Russian pipelines to transit Turkmen gas to Ukraine. He said the parties agreed for the first time that within six months of sanctioning an agreement on creating a free trade zone within the Commonwealth of Independent States (CIS), the agreement on the Turkmen gas transit term to Ukraine will be signed.

Ukraine is one of the largest gas consumers in Europe, using 52 to 57 billion cubic meters last year. Of this volume, the share of imports was 34-36 billion cubic meters. For Ukraine, the resumption of direct deliveries from Turkmenistan would be beneficial, since there is no doubt that the price of Turkmen gas will be lower than prices of Russian gas imported currently, even taking into account the transit fees.

Turkmenistan would not want to spoil relations with Moscow, who opposes the construction of the Trans-Caspian gas pipeline. If Ukraine imports Turkmen gas in the volumes in which it has been done before 2006, exactly 36 billion cubic meters annually, Turkmenistan may appear a cause to reject decision to deliver gas via the Caspian Sea to Europe. The capacity of Central Asia-Center pipeline enables to additionally pump that amount.

Turkmenistan, through its leader, has repeatedly stated that it is ready to supply its gas in any direction not at the expense of reducing gas supply in another direction, but due to "an adequate increase in production of fuels on already developed and new fields.

Turkmenistan also has not signed the agreement on free trade zone, providing mutual obligations of the parties. Therefore, the intrigue around the Turkmen gas is still present. It will become clear very soon whether Ashgabat remains committed to earlier reached agreements with the European Union.

The South Corridor is a priority EU energy project diversifying energy supply routes and sources and increasing EU energy security. The Southern Corridor includes the Nabucco gas pipeline, Trans Adriatic Pipeline (TAP), White Stream, and ITGI (Turkey-Greece-Italy pipeline). The South Corridor aims to directly link the European gas market with the largest gas fields in the world - the Caspian and Middle Eastern basin, with reserves estimated at 90.6 trillion cubic meters. The EU states that the strategic goal of South Corridor is to provide 10 to 20 percent of gas demand in the EU by 2020, equivalent to approximately 45-90 billion cubic meters of gas per year.

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