Energy stalemate in the Caspian

Orkhan Sattartov. Exclusively to VK

Last week was marked by a new stage of EU activity as part of the realization of its energy strategy in the Caspian region. The European Commissioner for Energy, Gunther Oettinger, visited Azerbaijan again. He met President Ilham Aliyev, Foreign Minister Elmar Mamedyarov and the Energy Minister, Natik Aliyev. One should emphasize that Oettinger has done a lot to promote the Southern Gas Corridor Project.

“The visit by European Commissioner Oettinger is another step towards  implementation of the Southern Gas Corridor Project in accordance with the joint declaration signed in 2011 by President of the European Commission Barroso and President of Azerbaijan Aliyev,” the head of the European Office in Baku, Rolan Kobia, stated. According to him, a significant progress was achieved in realization of the project since the signing of the declaration. “First of all, this was due to the Azerbaijani-Turkish gas trade and the transit agreement, as well as the inter-governmental agreement on construction of the Trans-Anatolian Gas Pipeline (TANAP),” Kobia emphasized. “It shows the Azerbaijani contribution to successful realization of the corridor.”

Azerbaijan and Turkey, supported by the EU and the US, have dealt with all the disputed issues this year and have agreed on construction of TANAP. Azerbaijani gas will be transported through TANAP across Turkey to the EU. Moreover, the European route for gas transport has been defined. This concerns the pipeline of Nabucco West.

In late June, Gunther Oettinger welcomed the consortium’s decision to develop the Shah Deniz field for Nabucco West. The consortium on development of the Azerbaijani Shah Deniz field has finished estimating potential gas export routes to South-eastern and Central Europe. Nabucco West has been chosen as a priority.

“The preliminary decision was for us to get gas directly from Azerbaijan and other countries of the Caspian region. Notwithstanding the complete decision on the whole route from eastern Turkey to Europe, Azerbaijani gas will definitely come to Europe,” Oettinger said. He called the decision a success for Europe and its energy security.

Now the EU has one unsolved and the most difficult problem, considering the regional situation. The volumes of Azerbaijani gas (16-20 billion cubic meters annually) are not enough for the growing gas appetite of the EU. These volumes are not enough to fulfil the relevant political aim – to diversify sources of energy supplies. In fact, the point is to decrease gas dependence on Russia.

There are three opportunities for a solution of this problem: using gas from Turkmenistan, Iran, and Iraq (to be more precise, Iraqi Kurdistan). Iran, considering the sanctions policy of the EU and the USA, is not considered as an acceptable variant. In Iraq the situation is very unstable, considering the serious disputes about distribution of gas export revenues between the regional Kurdish authorities and the Baghdad government.

In this context, Brussels relies on Ashkhabad, considering construction of the Trans-Caspian Gas Pipeline to be the easiest one to implement. However, Moscow and Tehran, following their economic and political interests, are blocking construction of the pipeline along the bottom of the Caspian Sea. Russia and Iran are not ready to let such a major player as Turkmenistan go to European markets directly.

However, Iran is ready to be a transit country for Turkmen gas. Azerbaijan also wants to benefit from the transit, as the country has 80% of TANAP shares. But Azerbaijan might become a transit country only if the Trans-Caspian pipeline is constructed. As a result, the region is in a stalemate situation, where none of the sides can achieve an acceptable solution.