‘Shah Deniz’ isn’t all there is to Azerbaijani gas

Europe still hopes for a ‘Caspian alternative’ to currently operating oil and gas suppliers, and the growth in production volumes is pushing the developers of Caspian gas and oil to discuss new ways and strategies of shipping it to Europe. One such discussion was held in Baku on April 18-19 as part of the 5th International Caspian Oil and Gas Trade and Transportation Forum. This popular annual event among world oil traders, exporters and experts is organized by the British ‘Confidence Energy’ and the Azerbaijani State Oil Academy.

The choice of the venue for the Forum was not made at random: over the last decade, Azerbaijan has become the most important gas and oil exporter of the region, as well as the largest transition area for gas and oil shipments from its neighbours to Europe.

The Azerbaijani Industry and Energy minister, Natig Aliev, said Azerbaijan is a key point of the oil and gas trade of the Caspian region and possibilities for transiting gas and oil from Central Asian countries are now being considered. The Minister pointed out that the success of the ‘East-West’ transport corridor mostly depends on the realization of large-scale Caspian energy projects.

Different projects of the ‘South transport corridor’ were also discussed at the Forum. The corridor is vital for the prospects of Caspian gas delivery to Europe. Specialists from Iran, Turkmenistan and Kazakhstan voiced their opinions on the subject.

The first vice-president of SOCAR (the Azerbaijani state oil company) said that the company plans to finish negotiations and sign a contract on the development  of the Azeri–Chirag–Guneshli gas field by the end of the year. He didn’t mention the name of the partner the negotiations are being held with, but previously it was declared that BP is interested in the project. The estimated gas reserves of this gas and oil field complex are 200-250 billion cubic meters. If all goes according to current projects, gas production there can be launched in 5 years.

SOCAR officials also claim that there are considerable gas resources in the ‘Babak’ complex. All in all, the estimated quantity of Azerbaijani gas should be inspiring for all companies involved in the ‘South Corridor’ pipeline project (‘Nabucco’, ITGI and ‘White stream’ being its sections), aimed at ensuring European energy security.

An alternative project of Asian gas delivery to Europe proposed by Ukraine involves creating a network of terminals for liquified natural gas. According to Igor Kirushin, head of the Oil and Gas Center, Ukraine is ready to import 5 billion cubic meters of LNG by 2015 for future transit to the EU. He also said that Ukraine is ready to participate in the construction of the gas terminal at the Georgian port of Kulevi – a project financed by Azerbaijan.

Following the bright prognosis on future gas development in the Caspian region, the ‘Nabucco’ consortium activated its efforts. Its representative told the Forum that a final decision on investment projects will be made by the end of this year. He also mentioned that, despite all the difficulties, the ‘Nabucco’ project is supported by international finance institutions.

To supply its gas to Europe, Azerbaijan will have to come to some agreement with Turkey – the traditional transit country for Azerbaijani gas. According to the Turkish ‘Botas’ oil and gas company, such an agreement is expected to be signed soon. Botas has already conceded the right to supply 750 million cubic meters of gas per year directly to Greece from Azerbaijan.

The head of the EU mission in Azerbaijan, Roland Kobia, said that Azerbaijan is now a key part of the whole ‘South Corridor’ project. He also confirmed that European companies are not only interested in the Shah Deniz gas field, and that development of other fields is a matter of time. The Caspian region has great potential for gas processing, while European demand for gas increases constantly. Today Europe depends on exports from Russia, Norway and North Africa, but soon new additional sources of gas will become necessary to meet the growing demand. Transit through Turkey is considered to be the most strategically important way of importing Azerbaijani gas to Europe, so the transit agreement between these two countries is awaited by the whole of the EU.

Eugeniy Krishtalev. Exclusively to VK