Azerbaijan is European partner with stable economy
Azerbaijan, which is being tracked as a gas player, will also have an essential role to play as a European partner with stable economy, Head of Economic Research at Sogefi Group and expert in European Energy Policy Luis Colasante told Azernews.
The Southern Gas Corridor (SGC) is the most important infrastructure pipeline project worldwide concerning the supply of Caspian gas to Europe, he noted.
One of the targets of Europe is to be less independent from Russian gas and use clean energy such as renewables and natural gas, Colasante believes.
“After a 7 percent growth seen in 2016, European gas consumption continued to be on the rise in 2017. Consumption showed a year-onyear increase of 6 percent in the first quarter when it was supported by low temperatures,” he said.
The needs of natural gas import in Europe will continue to increase in the next ten years due to substantial shift with Netherlands and UK turning from gas exporting to gas importing countries and Norway pursuing an energy policy to freeze any oil and gas projects, according to the expert.
“The Southern Gas Corridor is around 80 percent finalized with normally the first gas flow to Europe planned for 2019, which is great news not only for Europe but also for the Azerbaijani economy as it will allow increasing its GDP,” he added.
The SGC will not replace the Russian gas but it will be an outstanding factor for the south European countries that are supplied with liquefied natural gas (LNG) which has a higher shipping cost, Colasante noted.
“The gas’s buyer will do a price arbitrage between the LNG and the gas coming from the Southern Gas Corridor, and I am sure that LNG shares will continue to increase in Europe as new fields were found in Israel and Egypt,” he said.
The expert also commented on the issue of rivalry between SGC and Turkish Stream project.
“From my standpoint, the Turkish Stream project to Europe will not be a competitor of the SGC which is considered as a priority for the European Commission,” he said.
Turkish Stream project concerns several political and legal issues such as energy security and European energy strategies (aimed at independency form Russian gas).
“Long negotiations will need to be held between Russia and Europe in the following months and years. Unless Russia has no any ironclad guaranty from the European Commission the project will not be launched,” he added.
The SCG project is set to change the energy map of an entire region. The Southern Gas Corridor is one of the priority energy projects for the European Union, which aims to diversify routes and sources of energy supplies and thereby improve the energy security of the EU.
At the initial stage, the gas to be produced as part of the Stage 2 of development of Azerbaijan's Shah Deniz field is considered as the main source for the Southern Gas Corridor projects. Other sources can also connect to this project at a later stage.
The Shah Deniz gas will be exported to Turkey and European markets by expanding the South Caucasus Pipeline and the construction of Trans Anatolian Natural Gas Pipeline and Trans Adriatic Pipeline.
The first gas within the Shah Deniz-2 project will be delivered to Turkey in 2018 and to Europe in 2019.
The cost of the Southern Gas Corridor project is estimated at $41.5 billion.