Barroso tops Azeri gas deal with visa facilitation

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On a visit to Azerbaijan yesterday (13 January), European Commission President José Manuel Barroso signed a deal expected to bring ten billion cubic metres of gas each year to Europe, promising in return "visa facilitation" for Azeri nationals.

Barroso and his host, Azerbaijan's President Ilham Aliyev, signed a Joint Declaration on gas delivery for Europe in Baku.

Barroso hailed the agreement as "a major breakthrough," while Energy Commissioner Günther Oettinger, who accompanied him, said the deal was strategic, as Europe needed new gas supplies for the decades to come.

Barroso also said he was pleased to announce that Brussels and Baku would open negotiations on a Visa Facilitation Agreement in the near future. "This will make it easier for the Azerbaijani people to travel to the EU," he explained.

In recent years, visa facilitation agreements have opened the doors to the EU's Schengen border-free area to citizens of all Western Balkan countries except Kosovo. A similar process is now being applied to Russia and Ukraine.

Aliyev was quoted by local media as saying that Azerbaijan's proven gas reserves totalled 2.2 trillion cubic metres. Projected reserves were "quite [a lot] higher," he added, saying that his country wanted to sell gas to Europe as a means of diversifying its list of clients.

On Wednesday, Azerbaijan agreed to export at least a billion cubic metres of natural gas per year to Iran. The country also sells gas to Russia.

Barroso noted that Europe had the same interest: diversifying its sources of supply.

Azerbaijan is currently in negotiations with several Western companies to grant access to ten billion cubic metres (bcm) of Azeri gas in the Shah Deniz II field. The Nabucco consortium is one of the bidders, alongside other projects such as ITGI and TAP (see EURACTIV LinksDossier on the Southern Gas Corridor).

Ten billion cubic metres (bcm) of gas may not seem enough to fill the Nabucco pipe, which has a planned capacity of 38 bcm upon completion. ITGI and TAP have a planned capacity precisely of 10 bcm, and White Stream, a project to transport Caspian gas across Georgia to Supsa (a Georgian port near Potifor) on which little information is publicly available, has a planned capacity of eight bcm.

No volumes were mentioned in the official texts released, but the Commission took care to mention the four planned pipelines as potential clients. It is understood that whichever pipeline project gets Azeri gas after the tendering process will become the backbone of the Southern Gas Corridor.

But Azerbaijan may choose to award the gas to several clients, Elshad Nasirov, the country's top negotiator, recently hinted, saying that Baku did not want to put all its eggs in one basket.

"The Southern Corridor entails the construction of several pipelines, such as Nabucco, ITGI, White Stream and TAP, aiming to bring gas from the Caspian Sea to Europe. Nabucco aims to bring gas to the border of Europe with a brand new pipeline, whereas TAP [Tran-Adriatic pipeline] and ITGI [Interconnector Turkey-Greece-Italy] requires the strengthening of existing infrastructure in non-EU countries," the Commission stated.

"In the next months, Azerbaijan will make a further decision on which of these pipelines to prioritise," the EU executive added.

From Azerbaijan, Barroso and Oettinger are heading to Turkmenistan, the country on the other side of the Caspian Sea, where "huge gas reserves" were uncovered recently.

Several pipeline projects are competing with one another to bring to life the southern gas corridor – a vague blueprint to supply Europe with gas from the Caspian and the Middle East.

The best-known pipeline project in the southern gas corridor is Nabucco. But other smaller projects, such as the Trans-Adriatic Pipeline (TAP), the Turkey-Greece-Italy Interconnector (ITGI) or the Azerbaijan-Georgia-Romania Interconnector (AGRI) all have the potential to be an important element of the southern gas corridor and even call into question the future of Nabucco.

 

Some, like Russia's South Stream, even have the potential to becoming Nabucco 'killers' by making the flagship EU project irrelevant.

In theory, South Stream could also carry gas from the Caucasus, as Russia's energy state monopoly Gazprom offers competitive prices to gas-producing countries such as Azerbaijan or Turkmenistan.

  • April: Azerbaijan to unveil decision on which projects to sell gas to. 

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