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10. Dixit A. Investment and Hysteresis//Journal of Economic Perspectives, - 1992.
11. Cross R. On the Foundation of Hysteresis in Economic Systems//Economics and Philosophy, - 1993.
12. Пантин В. И. Волны и циклы социального развития: цивилизационная динамика и процессы модернизации. - М.: Наука, - 2004.
13. Рудь А. И. Влияние фаз больших Кондратьевских циклов на регулятивные функции государства//Бюллетень Международного Нобелевского экономического форума. - вип. 1 [5]. - том 2. - Днепропетровск, - 2012.
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Muradkhanli Nigar, Khazar University, PhD student, the Faculty of Economics and Management E-mail: [email protected]
Economic and geopolitical trends of the European gas market
Abstract: The aim of this paper is illustration of different models for diversification of the European gas infrastructure in order to increase supply volumes. The research is based on both qualitative and quantitative systematic analysis. The case study could be useful in evaluation of the economic and geopolitical factors of the existing European gas supply model.
Keywords: energy, gas, pipeline, diversification.
Europe as a whole is a major importer of natural gas.
The European Union (EU) member states are expected to import over 80 % of natural gas needs by 2030 [1].
Europe’s energy imports come primarily from Russia and the Middle East. Russia’s 1700 trillion cubic feet (tcf) of natural gas reserves were the largest in 2004, making it both the world’s largest gas producer and exporter [2].
About 80 % of Russian gas exports go to Europe, and about 30 % of the EU imports stem from Russia. Hence each party is dependent on the other, which may reduce the default risk for Europe. However the Russia-Ukraine political conflict could cause supply disruptions.
More than a half of the import volumes from Russia are transported through pipelines via Ukraine, so a halt to these supplies could have a significant impact on the European gas market. The Russia-Ukraine gas dispute of 2009 caused a significant disruption of gas supplies to Europe, described as the worst gas crisis in the International Energy Agency’s (IEA) history [3]. Moreover, current disputes between the two countries on the pricing of the Russian gas transit to the EU through Ukraine could affect prices of gas to be sold to Europe. Regarding the Middle East, European competition with other potential buyers and political instability throughout the region present challenges to potential for growth in
Europe’s energy strategy with respect to the Middle East. Because of the security risks in natural gas supply, Europe will have to cope with several challenges. On the other hand, importing a high proportion of gas volumes from a single source or only a few suppliers increases the risk of political pressure and price increases, therefore supply sources and means of transport to Europe are subject to diversification.
Gas imports in the form of liquefied natural gas (LNG) reached 25 % of the European total gas imports over the past decade. Major LNG providers including Qatar, Algeria, Nigeria, also Egypt, Libya, Trinidad and Tobago increased supplies to Europe. Capacity expansions are explained partly by the US shale gas boom removed the need for the US to import LNG, consequently LNG originally intended for USA re-directed to other consumers, including Europe [4]. Thanks to LNG trading, gas pricing has moved away from dependence on oil pricing and a spot market has been rapidly developed.
LNG becomes more topical day by day in Europe. Germany provided 2 billion-euro financial guarantees to E.ON for the development of the Canadian Gold-boro LNG export project. It is for the purchase of 5 million tonnes (8 billion cubic meters (bcm) of LNG per
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year for two decades. In addition, E.ON is dealing in buying stakes in other LNG export projects in East Africa, South America and the Mediterranean using the government-backed guarantees [5]. It should be noted that the government of Germany had guaranteed only pipeline projects in the past. Building of terminal on Poland’s Baltic coast to import LNG is supposed to cover a quarter of the country’s gas demand. Lithuania’s agreement with Norwegian Statoil on LNG imports aiming to cover 16 % of the country’s gas demand is another bright sample of the raised interest in LNG [6]. Gazprom is also implementing a phased strategy of expanding its presence in the LNG market [7]. Japan currently buys approximately 40 % of the world LNG [6]. The government’s plans on renewal of reactors could direct a significant amount of LNG to Europe in the future.
The discovery of the Shah Deniz (SD), one of the world’s largest gas-condensate fields in Azerbaijan raised expectations on Caspian region’s advantageous role in provision of gas to Europe. Signing the Declaration on the Southern Gas Corridor (SGC) between the EU and Azerbaijan in 2011 created a pivotal role for Azerbaijan, being the only gas supplier and anchor to open the SGC at the stage. The second stage of development of SD field serves for natural gas transportation to Turkey (6 bcm) and European market (10 bcm) through opening of the SGC, which is to be provided 10 % of the European energy demand by 2019 [8].
Turkey is becoming a major regional energy transit hub for the movement of natural oil and gas supplies from the Caspian region, Russia and the Middle East to Europe. The Trans Anatolian Natural Gas Pipeline (TANAP) Project agreement envisages gas transportation from the SD2 and other fields of Azerbaijan and other possible neighboring countries through Turkey to Europe. The mentioned gas volume dedicated to Turkey makes the 1805-kilometer TANAP practicable, as the project would not be economically viable with a startup volume of only 10 bcm. According to BOTA§, Turkey’s natural gas demand is expected to increase to around 66 bcm by 2020 [9]. It is obvious that the mentioned 6 bcm of gas will not be sufficient to satisfy Turkey’s rapidly growing gas demand. However TANAP would reduce Turkey’s dependence on Russian and Iranian gas imports in the future. Additionally, gas from other Caspian countries could be directed to the TANAP pipe, transiting via Azerbaijan. The project is designed to be expandable ultimately to 60 bcm. The advantages of TANAP for Azerbaijan include new export opportunities and stable income. TANAP enables
Azerbaijan for the first time to realise its gas through its own pipeline, supplying directly European customers. Accordingly it will remove necessity of payment for the transit service, making Azerbaijani gas price-competitive in Europe.
The necessity of building a pipeline that would transport the SD gas into Europe beyond Turkey arose. As a result of a number of proposed pipelines, SD Consortium selected the Trans Adriatic Pipeline (TAP). TAP is designed to transport natural gas from the SD 2 field in Azerbaijan, via Greece and Albania, across the Adriatic Sea to Southern Italy, and further to Western Europe. The pipeline will connect with TANAP near the Turkish-Greek border at Kipoi. TAP’s landfall provides multiple opportunities for further transport of Caspian natural gas to the largest European markets such as Germany, France, the UK, Switzerland and Austria. The pipeline’s routing can facilitate supplies to several South Eastern European countries, including Bulgaria, Albania, Bosnia and Herzegovina, Montenegro, Croatia and others [10]. TAP had many advantages over the other competing projects including its shorter length, the initial diameter of 42 inches and accordingly lower transportation costs and capital investment. The project is expected to bring significant economic benefits to Southern Europe. Independent studies indicate that in Greece alone, the implementation of this project will be worth approximately €1.5 billion, it is supposed to create 2,000 direct and 10,000 indirect jobs, providing promotion for foreign investments.
In addition to SD, Azerbaijan has other natural gas reserves that could supply Europe in the long term. According to IEA Medium Term Gas Market Report 2013, thanks to the development of fields other than SD, Azerbaijan’s gas production could reach 39-48 bcm between 2025-2030, of which 27-38 bcm could be directed to export [11]. Holding the world’s fourth largest natural gas reserves, Turkmenistan could potentially supply Europe and South Asia. The proposed Trans-Caspian pipeline would transport Turkmen gas a short distance across the Caspian Sea to the Azerbaijani coastline. From there it would link to the system transporting SD gas to Europe.
Conclusion. The emergence of the transportation projects connecting Europe with Caspian region and LNG projects development are bright examples of the change in the European energy market. The SGC will bring additional supplies and price competition and bolster competitive natural gas market in Europe. The challenge for the next decade is to expand SGC’s
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capacity so it can make a greater impact on securing Europe’s gas supply needs. LNG from a variety of sources will depend on global demand and price. It is likely to gain a larger role in the long-term perspective. However competition for LNG with Asian markets would affect supplies to Europe.
Russia’s competition with other suppliers in the European market would affect the existing pricing model. However Russian volumes in Europe look secure for at least 10 years as for significant reduction of the reliance significant alternative sources of supply are needed, otherwise overall gas demand reduction is
required. The first option requires longer time, but the second is impracticable in respect to Europe.
Over the last years the European energy market’s development showed a trend towards the growing power of energy companies. In fact gas infrastructure companies are expanding internationally, competing with each other for ‘market share’, innovating and diversifying. Independent operators would be a crucial factor in diversification of the European energy market. In all cases gas in its role as a transitional fuel will continue to be important for the foreseeable future of Europe.
References:
1. ‘Market observatory for energy. Key figures’. European Commission. - 2011.
2. ‘EU Energy Policy Data’. European Commission. - 2007.
3. ‘Simulating security of supply effects of the Nabucco and South Stream Projects for the European natural gas market’. Caroline Dieckhöner, Institute of Energy Economics, University of Cologne. The Energy Journal, -Vol. 33, - No. 3., - 2012.
4. Industry briefing: ‘The great game for gas in the Caspian. Europe opens the Southern Corridor’. A report from the Economist Intelligence Unit. - 2013.
5. ‘Germany gives E.ON credit guarantees to strike LNG deals - source’. Reuters. August 21, - 2014. - http://www. reuters.com/article/2014/08/21/e-on-lng-idUSL5N0QP3FS20140821
6. E-source: http://caspianbarrel.org/?p=17688
7. E-source: Gazprom official web-site www.gazprom.ru
8. E-source: SOCAR official web-site www.socar.az
9. ‘A step ahead towards the stage of maturation in Azerbaijani-Turkish relations: The Trans Anatolian Pipeline’. Dr. Burcu Gültekin Punsmann, Senior Foreign Policy Analyst, Economic Policy Research Foundation of Turkey.
10. E-source: TAP official web-site www.tap-ag.com
11. IEA Medium Term Gas Market Report 2013.
Sokolova Irina Vladimirovna, Kuban State University, undergraduate of International economics and management department E-mail: [email protected]
Starkova Nadezhda Olegovna, Kuban State University, candidate of science in Economics, associate professor, International economics and management department E-mail: [email protected]
Main trends and forms of marketing activity on electronic market
Abstract: The basic patterns and trends in the development of marketing communications in the Internet environment have been reviewed. The most relevant communication channels and tools of internet marketing in the global information network have been researched and characterized.
Keywords: information technology, internet marketing, communication, communication channel, marketing communications, network communications, target audience.
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