Victoria Panfilova, columnist for "NG", exclusively to VK
The intrigue associated with the question of two competing projects for the delivery of Azerbaijani gas to Europe - the gas pipeline Nabucco West or the Trans-Adriatic Pipeline (TAP) – seems to have been resolved. Nabucco West will not receive gas from the Azerbaijani field "Shah Deniz-2," the Austrian company OMV, a member of the consortium to implement the project, reported. "We have respect for it”, the company representatives said commenting on the solutions by the consortium developing the field to opt for an alternative project "Trans-Adriatic Pipeline."
According to experts, the choice of the operators of "Shah Deniz-2" greatly complicates the fate of Nabucco West. It appears, however, that this decision was made a little earlier - during the visit of Azerbaijani President Ilham Aliyev to Brussels and his meeting on June 21 with European Commission President Jose Manuel Barroso. It is obvious that the theme of supplying Azerbaijani gas to the European Union was a major subject in the negotiations. It is equally clear, however, that the final decision on this could not be made without the approval of the higher authorities in Baku and adoption of this decision with the European partners.
Although, given that Ilham Aliyev said in advance that the decision of the "entity", that is, of the operators of "Shah Deniz-2", will determine the final route, it shows, according to head of the club of Political Scientists "South Caucasus" Ilgar Velizade, that the president specifically made it clear that "the responsibility for making the decision on this issue is not so much for the Baku government as for a commercially-motivated gas consortium with the leading role played by foreign companies. "
Although the vendor of Azerbaijani gas to Europe is defined, it would be premature to predict the "death" of Nabucco West. It is possible that eventually both projects will be implemented. "During the development of the project "Shah Deniz-2", with an increase in the resource base of Azerbaijan, immediately the two pipeline projects can be carried out simultaneously,” Velizade said.
Partner and analyst of RusEnergy Michael Krutikhin believes that by early 2018 Europe will be able to receive Caspian gas. "By this time, the development of the field "Shah Deniz-2" should begin. It is possible that the EU and Baku will be able to negotiate with Ashgabat on Turkmen gas. Other suppliers such as Northern Kurdistan can also connect to the project,” Mikhail Krutikhin told VK. According to him, the EU considers the Southern Corridor as a multi-stage project and expects to receive up to 40 billion cubic meters. Nabucco West will meet from 8 to 10% of the needs of European countries in natural gas.
This view is supported by Azerbaijani expert, head of European office of VK Orkhan Sattorov: experts have no doubt in the fact that Azerbaijani gas will go to Europe, if, of course, there is no force majeure. "Both projects – Nabucco West and TAP – have political support of the United States and Europe, because both of them eventually open the way for Caspian gas to European markets."
Recall that the TAP project is designed to transport Caspian gas via Greece and Albania and across the Adriatic Sea to southern Italy in Puglia, and then - to Western Europe. The resource base is a gas condensate field "Shah Deniz-2". TAP's shareholders are Swiss AXPO (42,5%), Norway's Statoil (42,5%) and the German E. ON Ruhrgas (15%). TAP construction will begin in 2015.
Political scientist from Germany Ashot Manucharyan, however, doubts the success of the implementation of both of these projects. "They are part of the Southern Gas Corridor, talk about which has been going on for decades. This is a purely political project. Europe has set the goal to diversify gas supplies to get away from dependence on Russian monopoly and reduce the price of gas. It is too early to judge the implementation of this goal. To date, no one has invested a dime in this project. In Europe it is explained by the fact that revenues from gas sales are expected to be small," Manoucharyan told VK.
According to the analyst, the situation can change only if there is an absolute guarantee that the supply of gas in large volumes will be made for at least 10 years. If there is no such assurance, then the Europeans will not risk it, especially due to the fact that one of the major potential suppliers, Turkmenistan, is increasing the volume of its gas supplies to China.
In addition, the issue of Trans-Caspian pipeline is not addressed. The question rests on the determination of the status of the Caspian Sea, although, as we know, the EU does not consider the absence of a decision on the international legal status of the Caspian Sea to be an obstacle to the implementation of the project. But there are many other nuances. "The European position is that the pipeline from Azerbaijan to Turkey should be built by these countries. The Europeans should continue construction of the pipeline which is called Nabucco West. It is not clear how it will all be financed," Manoucharyan said.
However, an additional transport route for gas to Europe is being constructed by Russia – this is the "South Stream". The reason is not only commercial considerations. According to experts, the companies that will build the pipeline, as well as the intermediary companies on the route, will derive some profit. Baku, however, states they do not consider Russia to be a competitor in the European direction, but the fear still exists.
"From a commercial point of view, for Baku it is profitable to sell its gas to Europe, where it will be generously paid for it. Moscow should understand this. Therefore, “Gazprom" in 2008 made quite an interesting offer to purchase all volumes of Azerbaijani gas from "Shah Deniz" for European prices, given the presence of existing infrastructure. At the time, the proposal gave Azerbaijan a trump card in the gas bargaining with Europe. However, ultimately Baku decided to build together with the Turks a Trans-Anatolian gas pipeline costing $10 billion. So there are still some concerns from the Azerbaijani side. Moreover, there is the sad experience of Turkmenistan, which sold its gas using a similar scheme to "Gazprom", but in the end was left with a broken pipeline and billions of losses,” Orkhan Sattarov says. According to him, without questioning the reliability of Russia as a partner, Baku makes a sober assessment of the situation: the number of political, social and economic entanglements with Moscow is too great to risk putting all its eggs in only one "Russian" basket.
We must understand that Azerbaijan is not a competitor to "Gazprom" in the European gas market. 10 billion cubic meters of Azerbaijani gas, which will be used initially in Europe, are a drop in the ocean compared with the supply of Russian gas monopoly. Another issue is that in Moscow there is a serious and well-founded fear that after a while other gas-exporting countries can join the "Southern Gas Corridor" – most notably, the aforementioned Turkmenistan. And in this scenario, "Gazprom" may have to let them enter the European gas market. But these issues are already out of the plane of Russian-Azerbaijani relations.
Azerbaijan and Russia have kept some potential for cooperation in the energy sector, for example, on the "Baku-Novorossiysk" pipeline if the parties can come to an agreement on creation of a bank of oil, on which Azerbaijan insists. But talking about some serious prospects of cooperation is not necessary - after all, both countries are exporters of energy resources. At the same time, "export calibers" of the two countries cannot be compared. Azerbaijan should only profitably sell its relatively small amounts of gas, and this desire will not appreciably affect relations with Russia.
As has become known to VK, the official final choice of the route is scheduled, according to some sources, for June 28; the other sources speak of July 8, 2013.
