Azerbaijan expands gas export possibilities

Azer Ahmedbeyli

Yesterday's statement by the President of SOCAR (State Oil Company of Azerbaijan) Rovnag Abdullayev has put new emphasis on the issue of delivery of Azerbaijani gas to Turkey and the European markets. Baku and Ankara intend to build a new pipeline on the territory of Turkey, given the prospects of growth in production on the Azerbaijani sector of the Caspian Sea, exactly by 50 billion cubic meters per year by 2025.

According to Abdullayev, to export large part of the volume, the sides intend to implement the plan. This is a new, expected approach in the gas policy of Azerbaijan, and the main thing in this new approach is the transformation of Azerbaijan from the middle into a major supplier of hydrocarbons. It is also necessary to underline the fact that the decision is based not only on mutual benefit, but also on the atmosphere and level of sincerity that exists between the two countries.

Over the past year, two fields with large reserves of natural gas - Umid and Absheron - were discovered in the Azerbaijani sector of the Caspian Sea. President of Azerbaijan recently stated that over the last year, proven gas reserves in Azerbaijan increased by about 600 billion cubic meters. In addition, there are a number of perspective structures: Shafag-Asiman, Nakhchivan, Babek, deep-laying gas from Azeri-Chirag-Guneshli. The new approach means that Azerbaijan, considering both its interests and the interests of project partners, relies primarily on the increasing the volume of its own hydrocarbons reserves.

This project will be implemented by two states, but the participation of foreign companies is possible, Abdullayev said. Participants of this project intend to complete solution of all issues on this pipeline in 2012, and without delay, start building in order to make it ready by the end of 2017, when the second stage of development of Azerbaijani Shah Deniz gas condensate field will launch.

So now the transit of gas via Turkey to Europe will be carried out not by a one artery (the Turkish gas transmission system BOTAS, the capacity of which amounts to 10 billion cubic meters per year), but via two ones. After 2017, the volume of at least the same with the prospective increasing by 2025 can be added.

Abdullayev said that signed on Oct. 25 in Izmir, the agreements constitute a complete package of documents for the transportation of Azerbaijani gas to Turkey's border with Greece and Bulgaria. In fact, all conditions have been created for realization of projects of the Southern Gas Corridor, which will connect the Caspian region to Europe. In late 2011 - early 2012, the partners on Shah Deniz will complete the selection of the pipeline project, which will enable to export Azerbaijani gas to Europe. These projects include ITGI, TAP, Nabucco, and the version proposed by BP, envisaging delivering gas via Turkey to the Balkan countries.

Thus, Azerbaijan has enough gas reserves for deliveries to Europe, there are reliable partners who are ready to jointly produce it, there are also a transit agreement and real customers. Construction of a new pipeline with high capacity means that over the next 10-12 years, Azerbaijan will raise the production level not only from the second phase of the Shah Deniz development to a level being able to fill out a new pipeline, and thus will be able to maximally export gas resources.

The South Corridor is a priority EU energy project diversifying energy supply routes and sources and increasing EU energy security. The Southern Corridor includes the Nabucco gas pipeline, Trans Adriatic Pipeline (TAP), White Stream, and ITGI (Turkey-Greece-Italy pipeline). The South Corridor aims to directly link the European gas market with the largest gas fields in the world - the Caspian and Middle Eastern basin, with reserves estimated at 90.6 trillion cubic meters. The EU states that the strategic goal of South Corridor is to provide 10 to 20 percent of gas demand in the EU by 2020, equivalent to approximately 45-90 billion cubic meters of gas per year.