Southern gas corridor grows more
complex Robert M Cutler
MONTREAL - Just as smaller gas projects in
the European Union were welcoming a decision by
Azerbaijan and Turkey to build a Trans-Anatolian
Gas Pipeline (TAGP), statements now coming out of
Baku to the effect that Azerbaijan may be able to
fill the larger Nabucco pipeline without the need
of Turkmen gas - contrary to previous plans - have
complicated the supply picture for southern
Europe.
Design details remain to be
clarified for the TAGP, which will run from
Turkey's eastern to its western border and is also
referred to as "Trans-Anadolu" and sometimes by
its acronym in Turkish, TANAP, but it is planned
to take 16 billion cubic meters per year (bcm/y)
of natural gas, of which 6 bcm/y would be for
domestic Turkish consumption. The Interconnector
Turkey-Greece-Italy (ITGI) and Trans-Adriatic
Pipeline (TAP) projects are both scaled to
transport about 10 bcm/y, whereas the projected
volume of the
Nabucco pipeline has
always been 31 bcm/y. If one does the math, then
it is clear that this would leave 10 bcm/y for
either ITGI or TAP.
ITGI, TAP, and Nabucco
all submitted final bids to Azerbaijan for gas
from the second-phase development of the offshore
Shah Deniz natural gas deposit at the beginning of
October, 2011. At the last minute, BP submitted a
draft of an idea (the South-East European
Pipeline, SEEP) that is not a fleshed-out proposal
but which closely resembles the
subsequently-announced TAGP project. It was then
announced that decision originally due before the
end of the year would be postponed until the end
of March at the latest.
The various
projects are continuing their publicity campaigns
to position for winning the upper hand, or at
least survival. Nabucco representatives have
declared their willingness to work with the TAGP
project, whose sponsors declare that its volume
could indeed be scaled up, even though one of its
selling points is that it uses long segments of
existing pipeline that would require further
capital investment to be expanded. However,
Nabucco has suggested that “additional guarantees”
might be necessary in order that natural gas from
Turkmenistan, through a long-discussed
Trans-Caspian Gas Pipeline (TCGP) under the sea to
Azerbaijan, might be included.
The
guarantees would come from the eventual operators
of the TAGP, which at present is the operational
responsibility of Azerbaijani and Turkish
government-run companies the State Oil Company of
the Azerbaijani Republic (SOCAR) and BOTAS of
Turkey, although the companies have said that they
are willing to include others. Under the agreement
entered into by the neighbors, SOCAR will build
the pipeline with BOTAS and TPAO, another Turkish
state firm.
Until recently, gas from
Turkmenistan was considered necessary for ramping
up the quantities to Nabucco’s 31 bcm/y planned
capacity, particularly in view of Azerbaijan’s
repeated declaration that it was not prepared to
supply more than 10 bcm/y from Shah Deniz Two, in
order to maintain its ''security of demand''
(having many customers means not being beholden to
any single one). Now comes the suggestion from
unofficial circles in Baku that in the longer run,
Azerbaijan might be able to supply gas for Nabucco
by itself, without the need for Turkmenistan to
get involved.
In the past few years,
discoveries of further deposits in Azerbaijan's
Caspian Sea offshore have increased the country's
export potential to the point where Baku’s
assertion of an ability to export 31 bcm/y through
a version of Nabucco becomes credible, if one
supposes that gas from deposits other than Shah
Deniz Two will feed it.
The problem from
the standpoint of Nabucco’s proponents, however,
is that that then requires extending the project's
time-frame into the somewhat indefinite future,
since those other offshore natural gas fields are
not yet even close to entering production.
Clearly, this is not the same Nabucco that the
European Council endorsed at its Prague Summit in
2009 and for which a Nabucco Intergovernmental
Agreement (NIA) was laboriously negotiated.
Indeed, the creation of the TAGP project
effectively makes it possible for Turkey to
transit Azerbaijani gas to Europe without being
bound by the rules of the NIA, which it signed and
ratified. As spokeswoman for the European
Commission Marlene Holzner told Reuters this week,
the fact that “Turkey is only an observer of the
European [Energy] Community ... means that it does
not have to implement EU energy law.” (The
European Energy Community extends the EU’s
internal energy market to a number of EU
non-members Southeastern Europe.) Holzner
nevertheless expressed the hope that an
intergovernmental agreement would be created “for
any pipeline” that would reflect “certain
principles.”
As for the smaller SGC
projects, it is to be noted that the Norwegian
firm StatOil holds a 42.5% stake in TAP as well as
a 25.9% share in the consortium developing
Azerbaijan’s offshore Shah Deniz deposit, although
this is no guarantee of the TAP's eventual
success. Azerbaijan will remain the owner of the
10 bcm/y that will transit the TAGP to Europe, and
it is just not clear that there will be sufficient
demand for it in Italy, where TAP makes eventual
landfall.
On the other hand, an
Interconnector Greece-Bulgaria is under completion
that could take half of the 10 bcm/y in the first
instance, which could conceivably be doubled. And
Azerbaijan is known to have a distinct sympathy
for the smaller countries in Southeastern Europe
that especially suffered from Russia's mid-winter
cutoffs of natural gas to Europe via Ukraine
during the last decade.
Dr Robert M
Cutler (http://www.robertcutler.org),
educated at the Massachusetts Institute of
Technology and The University of Michigan, has
researched and taught at universities in the
United States, Canada, France, Switzerland, and
Russia. Now senior research fellow in the
Institute of European, Russian and Eurasian
Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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