WASHINGTON, DC - Thursday, August 16, 2012 -
Azerbaijan is increasingly considering the Nabucco West project linked with the Trans-Anatolian natural gas pipeline (TANAP) as the best option for transporting Caspian gas to West European markets.
Azerbaijan’s Industry and Energy Minister Natik Aliyev recently stated that “I consider that Nabucco West is the best option from all points of view because it is a project of the European Union and they always supported this project,” to reporters ahead of a formal decision. “It has a big capacity, big diameter, and it gives us the opportunity to deliver gas to east and central Europe. It's a more reliable market for Azerbaijani gas.”
In June, Azerbaijan's Shah Deniz II consortium, led by BP Plc and Statoil, selected the Nabucco West pipeline with a route running from the Turkish-Bulgarian border to Baumgarten (in Austria), for one of two possible routes to carry Caspian gas to Western Europe. The other option is the Trans-Adriatic Pipeline (TAP) that will start in Greece, cross Albania and the Adriatic Sea, and come ashore in southern Italy. Although Aliyev’s statement is not an official decision, it seems that the government intends to support Nabucco West.
The European Commission has welcomed the progress towards ensuring the EU’s energy security by developing alternative routes of gas supply. “With this pre-selection, we are a step closer to getting gas directly from Azerbaijan and other countries in the Caspian region. Whatever the final decision on the whole route from the Eastern part of Turkey to Europe, Azerbaijani gas is certain to come to Europe,” EU Energy Commissioner Günther Oettinger said. “This is a success for Europe and for our security of supply.”
The gas would first move through Turkey before taking either the TAP’s southern route or the Nabucco West path into Austria. Oettinger also welcomed a signature of the Inter Government Agreement and the Host Government Agreement to implement the Trans-Anatolia Gas Pipeline (TANAP) in late June.
TANAP will transport gas across Turkey from east to west, providing for stable transit across the country. The project will link with the expanded South Caucasus Pipeline starting in Azerbaijan and continuing through Georgia, and with a variety of proposed pipelines in the EU. For the first time, a direct link between the EU and the Caspian Sea will be established.
The Southern Gas Corridor, bringing gas from the Caspian and Middle East to the EU, needs a new pipeline across Turkey as there are existing capacity constraints in Central Anatolia. TANAP will hence contribute to both Turkey’s and the EU’s security of supply.
The Consortium will decide on the pipeline going through Turkey next year, according to the EU press release. Therefore, the final decision on the whole route and the pipelines chosen will be known only in June 2013. “Whatever the final decision taken – one or more pipelines – there will be an unbroken system of pipelines that will be built from the Caspian Sea to Europe,” it reads.
The $7 billion TANAP is set to transport 16 billion cubic meters (bcm) of gas a year from Azerbaijan’s Shah Deniz II field, the largest natural gas field in Azerbaijan. Turkey has a 20 percent stake in TANAP, while Azerbaijan’s state oil company SOCAR holds 80 percent. In March, a Turkish energy ministry official said Turkey may raise its 20 percent stake in the project.
Construction is expected to start at the end of 2013 or in early 2014, and the first phase should be ready in 2018. Ten bcm of gas is planned to be shipped to Europe, while Turkey will get the remaining 6 bcm. The project is designed to be expandable to 30 bcm and ultimately 60 bcm.
Turkish Prime Minister Recep Tayyip Erdogan said the link will initially carry gas from Shah Deniz II, then from other Azerbaijani sources. “Additionally, gas from the other side of the Caspian could be directed to the TANAP pipe, transiting via Azerbaijan,” Erdogan said. At the same time, Azerbaijani and Turkish officials have said the two countries will continue to be part of Nabucco.
Christian Dolezal, a representative of the Nabucco natural gas pipeline, says that TANAP will not pose an obstacle to the Nabucco project. He stressed that Nabucco is ready to channel natural gas from TANAP on the Turkish-Bulgarian border. “We want to play a positive role in this project. Turkey, along with [state-owned crude oil pipeline company] BOTAS, is an important project partner for Nabucco and Turkey will continue to be our partner,” Dolezal said in an interview with the Anatolia. “We are ready to start talks on how to interconnect these two projects.”
According to Dolezal, the negotiations on this issue will start in the upcoming months. Dolezal also stressed that the project is open to new shareholders. “We have seen that there is interest from Shah Deniz consortium partners, and we appreciate it as a positive aspect,” Dolezal said.
Azerbaijan expects to increase its gas exports to more than 30 bcm per year by 2030 from the current 6 bcm, with a further possible increase to 50 bcm, according to Aliyev: “I think that if our programs are successful … in 2030, we can produce for export more than 30 bcm of gas per year … In Shah Deniz II alone we can produce 30 bcm … the 16 bcm calculated by BP is very pessimistic. It will be more than this. We can increase easily, but it depends on the market.”
(This article was first published in the Central Asia-Caucasus Analyst (www.cacianalyst.org), a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center.)