Our Analytics 9 june — 12:01

Azerbaijan becomes 'gas cushion' for Europe (Our comment)

270

BY ELNUR MAMMADOV

Today, Europe is looking forward to receiving natural gas from Azerbaijan. This phrase by deputy vice-president of the State Oil Company of Azerbaijan (SOCAR) on investments and marketing Vitaly Beylarbeyov, became the leitmotif of the 26th Caspian Oil and Gas International Conference held in Baku. Yes, natural gas has a future, today the global demand for it is growing. And Azerbaijan is ready to supply this gas, and in the future to increase its volume. But why are the eyes turned to Europe?

Vitaly Beylarbeyov

Against the background of growing demand for natural gas, the share of Europe itself in global natural gas production is decreasing and by 2040 it is expected to fall to 2.5% from the current 7%. An almost triple decline makes gas production in the European region less promising. This is the only region where the prospects for natural gas production are reduced compared with all other regions. And this, in turn, expands opportunities for gas producers and exporters to enter the European market.

Natural gas in Europe today accounts for about 23% of the continent's energy balance. True, in the coming years, according to forecasts, there will be a gradual decrease in total energy consumption. But, nevertheless, the demand for gas will be able to demonstrate some growth. Natural gas will be the only hydrocarbon resource that will increase its share in the continent's energy balance, reaching 26% by 2040. And in order to weaken the dependence of the European market on Russian gas, new energy carriers are being brought here, including from the Caspian region, but the demand is still high. But even this does not reduce the continent's demand for gas. According to the forecasts of the Gas Exporting Countries Forum, by 2040 the demand for natural gas is expected to grow by an average of 1.7% per year, which corresponds to an overall increase of 46%. The electric power sphere, industry and transport will make the greatest contribution to the increase in gas demand, making up almost 65% of total demand by 2040.

Currently, Azerbaijani gas is transported via the South Caucasus gas pipeline to Georgia and via TANAP to Turkey. There is no doubt that next year TAP will be launched and gas from the Shah Deniz field will reach Europe. And there they are eagerly awaiting Azerbaijani gas, the volume of which at first will not be sufficient to meet the growing needs of Europeans.

Therefore, Azerbaijan today wants to build an infrastructure linking the Southern Gas Corridor (SGC) with other sources of gas. 'The Southern Gas Corridor has already been built, operations have begun. This is a really successful initiative, which was not easy. If we have other opportunities or attractive offers, we will take advantage of this,' said Beylarbeyov. According to him, Azerbaijan has built the SGC not only for the Shah Deniz project. Fields both in Azerbaijan and outside the country are taken into account. It does not matter whether it is the Trans-Caspian line or pipelines along SGC, all manufacturers can join this corridor.

A lot of sense in the last sentence. If Iran wants to pump 5-6 billion cubic metres of gas into Europe, then it's just enough for it to cut into the common line at some point. And if Turkmenistan needs to build a gas pipeline with a capacity of 30 billion cubic metres to Europe, as was planned in the 1990s, it will already need a separate pipeline. But it would not take Ashgabat years to conduct numerous negotiations with individual countries and companies, and the corridor has already been fully explored and is ready to accept the new pipe. The corridor is ready.That is why recently the interest in the Trans-Caspian gas pipeline has increased again. The visits to Turkmenistan of heads of European structures and individual countries of the continent have increased. The US State Department urged Turkmenistan to use the agreements reached by the Caspian states to connect to the Southern Gas Corridor, which will give this country a positive impetus to development. Ashgabat itself became more active. Recently, negotiations between the President of Turkmenistan Gurbanguly Berdimuhamedov and the Prime Minister of Azerbaijan Novruz Mammadov took place there. The issue of gas supply, as noted by Turkmen media, 'to the countries of the Eurasian continent' was an important topic of negotiations. The sides noted that Turkmenistan and Azerbaijan have significant reserves of oil and gas, which creates optimal conditions for organising long-term energy supplies to the countries of the Eurasian continent. As can be seen, the Turkmen side gives a much larger scale to exporting its gas, which is understandable - there is a lot of gas in the country and it is the main source of export.

True, gas reserves in Azerbaijan are quite impressive, but it takes time to extract them. So, BP plans to begin exploratory drilling in deep-seated prospective structures of the Shah Deniz field next year. These structures lie beneath the field; their potential reserves are estimated at trillions of cubic feet. Gas production from the Absheron and Karabakh fields is approaching. And on Umid, which is being developed directly by SOCAR, this year it is planned to produce up to 1 billion cubic metres of gas. In general, according to the Secretary General of the Gas Exporting Countries Forum, Yuri Senturin, there are about 1 trillion cubic metres of unexplored gas resources in the country. And this is in addition to 1.4 trillion cubic metres of proven reserves.

Yes, we are turning into an important gas supplier in the region and are actively increasing our export potential. The country will increase production in the new phases of the development of the giant Shah Deniz field. After 2023, the first phase of development of Absheron will be launched, and by 2025, production here will reach 5 billion cubic metres. And all this is expected not in the distant future, but in the coming years. There are, however, more long-term projects, but this is only to the benefit of the country. Given the prospects for new projects, the forecast for natural gas production in Azerbaijan is very promising - this is the opinion of many experts.

Yes, Europe is looking forward to receiving Azerbaijani gas. It can be confidently said that Azerbaijan is just as eagerly awaiting the start of supplying its gas to Europe. We have large natural gas reserves, and in the West there are also great needs for it. And literally only a few months remained until the day when the first Azerbaijani gas enters the Southern Gas Corridor to Greece, Bulgaria, Albania and further to Italy.

Latest news