Weekly actual topics in Azerbaijan (july 31- Aug. 4)

Analysis Materials 7 August 2017 14:39 (UTC +04:00)

New US sanctions not going to jeopardize Southern Gas Corridor

The new US bill on sanctions against Russia will also affect the Russian pipeline project known as the Nord Stream 2.

The Senate has approved a bill toughening the US sanctions against Russia, Iran and the North Korea. The document is to be signed by US President Donald Trump.

According to the bill titled Countering America's Adversaries Through Sanctions Act, the US government is required to counteract the construction of the Nord Stream 2 as the project has a harmful effect on the energy security of the European Union, the development of the gas markets in Central and Eastern Europe, and energy reforms in Ukraine.

Another project, the Southern Gas Corridor, which should provide Europe with Caspian gas, despite the equity of Iranian and Russian companies there, is not mentioned in the document. The gas to be supplied through the Southern Gas Corridor will be produced at Azerbaijan’s Shah Deniz Stage 2. Russian Lukoil owns a 10 percent stake in the project. National Iranian Oil Company (NIOC), exempted from sanctions by a special amendment to the US law on Iranian energy companies, also has a share there.

There was enough speculation over this project. Former US Ambassador to Azerbaijan Richard Morningstar said that the US bill tightening the anti-Russian sanctions may harm the development of Shah Deniz Stage 2 and the supply of the gas extracted there to Europe.

However, sanctions against Russia or any other country will unlikely prevent the West from implementing such a strategically important project as Southern Gas Corridor.

As for the Nord Stream 2, the political component of the project plays a big role here, which gives Moscow the leverage to exert influence upon Europe. However, the Caspian gas, which can help the EU to ensure energy independence and security bypassing Russia, is in the US interests.

Therefore, lobbying for the project that will supply the Caspian gas to Europe has been centerpiece to Washington's long-term policy of European energy security.

The new US administration apparently understands that realization of Shah Deniz Stage 2 and Southern Gas Corridor will change not only the world's energy map, but also its political map, as it will contribute to ensuring Europe's energy security and weakening Moscow's influence in the region, which is strategically important for the US.

Taking into account the aforementioned, the US is unlikely to jeopardize such an important project as the Southern Gas Corridor.