Commission eager to see the capacity of Southern gas corridor doubled

EU Commissioner for Budget and Human Resources Günther Oettinger [L] and the President of Azerbaijan Ilham Aliyev. [@GOettinger Twitter]

A recent meeting of government officials and big energy companies in Azerbaijan signalled ambitions about doubling the capacity of the Southern Gas Corridor (SGC), and of more European countries becoming clients.

The fifth meeting of the SGC Advisory Council was held in Azerbaijan’s capital Baku on 20 February. SGC is one of the priority projects for the EU and envisages the transport of 10 billion cubic meters per year (bcm/y) of Azerbaijani gas from the Caspian region through Georgia and Turkey to Europe.

The 3,500 km SGC consists of three parts: the South Caucasus Pipeline, which stretches from Baku and extends westward into Georgia; the Trans Anatolian Pipeline (TANAP) that traverses the entire territory of Turkey from east to west; and the Trans Adriatic Pipeline (TAP), which moves through Greece, Albania and ends in Italy.

From Greece, an interconnector is planned to bring gas to Bulgaria and possibly to other countries of the region of Central Europe and the Balkans.

The number of countries that participated in the SGC Advisory Council grew this year to 17, said Parviz Shahbazov, Azerbaijan’s minister of energy, as quoted by the Azeri press.

“For the first time, Serbia, Hungary and San Marino took part in the meeting. This shows that interest in this project is growing year by year,” the minister said.

The launch ceremony of the first stage of the SGC project was held in Baku in May 2018, and the opening ceremony of the TANAP was held in June in Turkey’s Eskisehir Province.

Azerbaijan inaugurates Southern Gas Corridor key terminal

Azerbaijan inaugurated on Tuesday (29 May) a terminal that is planned to be the starting point of the first pipeline to transport gas from the Caspian Sea to Europe, bypassing Russia.

The minister added that work on the Trans-Adriatic Pipeline (TAP) is ongoing, with 85% of the work having been completed to date. The first molecules of gas are expected to start flowing to the EU in 2020.

The offshore gas field Shah Deniz is, at the moment, the sole supplier to the corridor, but President Aliyev was quoted as saying that he is confident that other fields in a country with more than 2.6 trillion cubic meters of proved reserves will feed into it.

Currently, international oil and gas companies are engaged in developing some other offshore fields, such as Absheron, Umid and Babek.

“That is why I am sure that Shah Deniz will not be the only source of resources for the Southern Gas Corridor, and the more gas we produce from our fields, the more potential there will be for supplying our partners and diversifying the supply chain we talk about,” President Aliyev said.

A high-ranking representative of Turkmenistan who took part in a session of the SGC advisory board in Baku earlier in the day signalled the country’s interest in joining the project.

Turkmenistan is one of the countries with the richest gas reserves in the world, but it is located on the “wrong” side of the Caspian Sea, which has prevented it from exporting its energy resources to Europe. But a recent agreement on the delimitation of the Caspian Sea could be a game-changer and the country could envisage exporting its resources to the best client: the EU countries.

Turkmenistan to tap into Southern Gas Corridor

Gas swaps in which Iran plays a central role could open the door for Turkmenistan, a Central Asian country with ample gas reserves, to become an important player on the EU gas market, according to media reports.

EU Commissioner for Budget and Human Resources Günther Oettinger, who attended the meeting, was quoted as saying that it was up to the Turkmen leadership to make a final decision on joining SGC. Oettinger has replaced the Commission’s energy chief Maroš Šefčovič, who is campaigning to become the president of Slovakia.

Oettinger said that Azerbaijan was a strategic gas partner for the EU. By using the example of the Netherlands, he noted that gas volumes in Europe are decreasing every year. The Netherlands is phasing out its domestic gas production.

“In the next ten years, there are plans to double the volume of gas supplied to Europe via the SGC to 20-25 billion cubic meters,” Oettinger stressed.

The Commissioner also said the EU executive hoped to bring gas from SCG to the countries of the Western Balkans.

Bulgaria’s Energy Minister Temenuzhka Petkova said her country has “an extraordinary advantage” of being close to the SGC.

She added that the construction of Interconnector Greece-Bulgaria (IGB), a key element linking to SGC, and the joint initiative of Greece, Bulgaria, Romania and Hungary for the construction of the so-called Vertical Gas Corridor, was of great geostrategic significance for the diversification of gas supply.

The Vertical Gas Corridor is also known as BRUA (Bulgaria-Romania-Hungary-Austria).

At a time when Russia plans to re-channel its gas supplies via Turkey, Central Europe needs supplies from sources other than the traditional one.

Petkova said Bulgaria plans to start the construction work in the middle of this year and to complete it in 2020, coinciding with the launch of TAP.

“Bulgaria is an integral part of the Southern Gas Corridor and will continue to work on gas projects that provide real diversification of natural gas supply sources and routes,” Petkova said.

Germany is not among the prospective clients of SGC, but it’s a strong backer of the project.

After Trump attack on Russia ties, Merkel eyes Azeri gas

Castigated by US President Donald Trump as relying too much on Russian gas supplies, German Chancellor Angela Merkel heads to Azerbaijan this week to discuss the development of a southern pipeline to deliver gas to Europe from the Caspian.

In terms of diversification of gas supplies, the Juncker commission has few projects comparable in size with SGC to show European citizens as an accomplishment ahead of the European elections in May.

[Edited by Zoran Radosavljevic]

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