Construction of Transcaspian pipeline is a long-term process

In recent weeks issues of energy security have become quite relevant in the context of the events, which took place in September. Several important projects in the sphere of gas development and transition are being discussed. In September Russia has launched Nord Stream pipeline in the Baltic Sea to Germany. Meanwhile, Azerbaijan announced exploration of new major gas deposits, which can be another support of a new pipeline system within South Corridor. Experts are speaking about new hopes for Nabucco pipeline and construction of Transcaspian pipeline. The EU decided to encourage Baku and Ashkhabad for negotiations on the pipeline in the Caspian Sea. The head of the Centre on Oil Studies of Azerbaijan, Ilham Shaban, told VK about configuration of the gas market in the region in the nearest future.

-    Comment on the latest news from energy market and on prospects of Nabucco and Transcaspian projects.

-    The issues of the pipeline projects in the South Caucasus and Europe have been considered in details at the recent gas conference in Baku. Experts drew their attention to two important aspects: resource prospects and financing of difficult infrastructure projects and their for-profit aspect, I mean Nabucco and Transcaspian pipelines. However, nobody could comment clearly on volumes of for-profit gas, which could full pipes and define cost of the project. European executives arrived to Baku and tried to present the projects well. Their main points are that if, for example, Azerbaijano gas from Shah Deniz-2 and other sources is used for Nabucco, the project will be profitable and attractive. Such talks we have heard since 2008. At the last meeting in Baku the representative of BP explained schemes of suggestions on the pipeline projects. According to him, the company has sent a detailed list of technical for-profit and other demands to the pipelines to the consortiums and waits for answers by October 1st. There are 8 demands. Considering them, we can say that not any company can fulfill the demands.
BP and partners want to have modern infrastructure, as it should be used for a long term, for 30-40 years. As for the right coast of the Caspian Sea (Turkmenistan), Azerbaijan is not interested in what happens there. The European Union deals with it.

-    The European Union approved negotiations on Transcaspian pipeline with Azerbaijan and Turkmenistan. Please, comment on consequences of this decision. Will they be successful?

-    The EU representative in Azerbaijan, Roland Cobia, replied to critical statements by the foreign ministry of Russia. The point of the answer is that Moscow shouldn’t find faults with environment of the Caspian Sea, as it was Russia that implemented several successful pipeline projects in seas: the Blue Stream in the Black Sea to Turkey, the Nord Stream in the Baltic Sea to Germany, the South Stream us being prepared. The EU guarantees that construction of the Transcaspian pipeline will meet strict environmental standards. As for the legal status of the sea, the issue can be discussed for fifty or even hundred years by the lateral countries. The EU considers that construction of the pipeline is in capacity of the countries, which are involved in the project. Interference with it by other states will be considered as efforts to prevent cooperation.

-    In this context, do you see prospects in approach of Azerbaijan and Turkmenistan positions in the sphere of status of the Caspian Sea and dividing lines in the shelf area?

-    I think that the problem of the Caspian status will be settled after making it a subject of political bargaining between Russia and the EU. This spring the EU adopted next set of regulation laws in the energy sector, which forbids a gas producer to do gas offload business and own distribution. It is only one aspect, which causes disagreement between the sides.
As for prospects of approach between Azerbaijan and Turkmenistan, it is difficult to judge at the moment. Consultations on political issues are scheduled between the countries for the future several weeks. However, we should remember recent successive visits to Baku and Ashkhabad by the head of the European Committee Barrozo and the European commissioner on energy Ottinger. The officials signed the cooperation memorandum in the sphere of energy with Azerbaijan, but no document was signed in Ashkhabad. If this tendency remains during all negotiations, what can we talk about? Gurbanguly Berdymukhamedov often says that he is ready to give any amount of gas at his boundary, but no practical steps are taken. What the president of Turkmenistan will do, we cannot say, as well as, whether the Western companies will participate in Turkmenistan projects at all. Chinese companies are successfully working in the eastern part of the country, where main gas producing capacities are concentrated.

-    What prospects has Russian Gazprom in participation in new projects of Azebaijan?

-    First of all, consortiums for development of gas structures has been already forms, they include Total and Gaz de France. I believe that valuable deposits have been found, and nobody will yield participation in the consortium. On the other hand, there is no point in buying the share for Gazprom. It is known that the consortium will establish there a platform with 10 billion cubic meters capacity. If Gazprom buys 20%, it gets 2 billion cubic meters, which is insignificant for the biggest corporation of Russia.

-    And if we consider the issue from the political point of view?

-    Does participation of LUKoil in Shah Deniz influence the policy? This company has been working in Azerbaijan for 17 years, but Russian policy doesn’t depend on it. Time, when SOCAR suggested Russia to reyield its share, has passed. On the other hand, many US companies are working in energy projects of Azerbaijan, but Azerbaijan is not a pro-American country. For example, an Iranian company is working at Shah Deniz, but it doesn’t mean one of pipelines should go to Iran.

-    What are the chances for implementation of the Transcaspian pipeline?

-    I follow publications of Western, Russian and other mass media in this sphere and find surprising things sometimes. For example, some periodicals report that length of the pipeline will be 300 km. They rely on the straight line between Baku and Turkmenbashi, which is 298 km. They think that the pipeline can be constructed as a bridge. In reality its length may be 400-450 km, as this part of shelf has a lot of mud volcanoes, which should be by-passed. Moreover, conclusions often have no backgrounds, as nobody has already implemented preliminary engineering of a potential route of the pipeline. We can only forecast about transferring gas to Azerbaijan. However, nobody thinks about the way gas will be transferred to Turkey or cross the EU boundary. There are a lot of problems. It is necessary to negotiate with Turkmenistan on transition. The current talks between Azerbaijan and Turkey concern only Azerbaijani gas and cannot be spread to Turkmen gas. I think that the Transcaspian pipeline is a long term process. It cannot be so that today they announce news and tomorrow gas is provided to the system.

Interview by Yeugeny Krishtalev. Exclusively to VK.