Southern Gas Corridor not competitor for Gazprom in Europe

The Azerbaijani gas transport project Southern Gas Corridor is not a competitor to the Russian gas suppliers to Europe, energy experts said today in an interview with correspondents of Vestnik Kavkaza, commenting on recent insinuations in the mass media that one of the true causes of the fighting in Karabakh was Moscow's desire to disrupt the implementation of the project, which allegedly poses a threat to Gazprom as a powerful new "blue fuel" source for Europeans.

The leading analyst at the National Energy Security Foundation, Igor Yushkov, primarily emphasized that the contracted volume of deliveries through the Southern Gas Corridor doesn't create any competition for Gazprom. "The project involves the supply of an additional 16 billion cubic meters of gas from the Azerbaijani field of Shah Deniz. Only 10 billion will be supplied to Europe, 8 billion to Italy and one billion each to Greece and Bulgaria. This is no replacement for Russia. Azerbaijan doesn't guarantee that the pipeline scheme will increase the volume of deliveries. That is why Europe is now actively negotiating with Iran, which may take the empty Turkmen niche, but it doesn't mean that Iran will supply gas to Europe through Turkey or Azerbaijan because the Turkey-Iran linkup is quite problematic,'' the expert said, recalling the regular explosions of Iranian-Turkish pipelines.

Political scientist Rovshan Ibrahimov paid attention to the true state of things, reminding that the Southern Gas Corridor will deliver only 10 billion cubic meters of gas a year to European consumers, while Gazprom supplies more than 150 billion cubic meters of gas per year to the border with Europe.

"It is ridiculous to argue that Russia considers the project as competitive, trying to prevent its realization. In this sense, any fears are meaningless. On the other hand, this project is not only Azerbaijani: it involves the European Union, Turkey and the countries of the Western Balkans and Western financial institutions provide loans for its implementation. If Gazprom has intended to make any attempts to prevent the building they would have started a few years earlier, not now when TANAP is about to be completed and the TAP is to be started," the expert said.

The energy expert warned that the authentic Russian competitors in the European gas market may become North Africa and the Middle East. The wake-up call is the construction of LNG terminals in Europe (infrastructure for converting liquefied natural gas, exported to the country, into a gaseous state, which is suitable for transportation by pipelines), the expert said.

"Do not forget about the shale gas revolution in the United States and the recent start of exports of shale gas to the European markets, which can also become a serious alternative to Russian gas. However, let me remind you that Russia and Germany have some agreements, in addition the Nord Stream is used to export Russian gas to the German market, making Germany the main distributor of gas to other European countries. Germany doesn't want to lose this benefit,'' Rovshan Ibrahimov said.

According to Igor Yushkov, the liquefied natural gas may become the real competition to Russian gas in the future for political reasons. "The most politicized European countries are already beginning to operate at a loss, purchasing LNG, for example, by Lithuania and Poland. The main producer of LNG is Qatar, which supplies a part of its volumes to Europe, but there are also other traditional providers – Algeria and Norway. The Americans also want to compete, but the price is about 1.5 to 2 times higher in comparison with Russian gas. Even Lithuania refused this idea. But purchases will continue due to political reasons,'' the leading analyst of the National Energy Security Fund concluded.