CC BY
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I. Fedorovskaya,
Senior Researcher, sector of "Russia
and the new states of Eurasia", IMEMO RAS
THE SOUTHERN GAS CORRIDOR AND AZERBAIJAN
Nowadays Southern Gas Corridor (SGC) is one of the most important energy projects of the European Union to ensure diversification of both suppliers and transit of energy resources and thereby strengthen the EU's energy security. The European Union is one of the largest consumers of gas in the world. Today, the EU, Turkey and Balkan countries consume about 360 billion cubic meters of gas annually, which is 17% of global consumption. According to the forecasts, gas demand will double in Europe by 2030 - up to 775 billion cubic meters. In 2013, the share of imports in total consumption was 64%, and by 2030 it will reach 80% in Western Europe, according to the calculations.
Domestic production of natural gas in Europe is less than 2% of world production of this energy resource. European countries have made significant progress in the development of alternative energy sources and energy efficient technologies, but these efforts have not led to a significant reduction in gas consumption in the EU until now.
Today gas in Europe is produced in the UK, the Netherlands and Norway. However, gas reserves are almost exhausted in the UK and the country is not even able to cover its own needs and is a net importer of gas. The Netherlands are ready to supply not more than 30 billion cubic meters of gas per year to neighbors. Norway is a major supplier of gas among the European countries, providing up to 30% of the EU gas (115 billion cubic meters of gas per year). However, not all is well there. According to experts, gas output in Norway will gradually decrease after the peak in 2020, and its export potential may be reduced
to 90 billion cubic meters per year by 2030, with the increase in gas consumption in the country1.
Thus, the EU covers its gas needs mostly through imports, more than 80% of the imported gas comes via pipelines mainly from Russia. In 2014, the EU imports 40% of natural gas from Russia, and 66% of Russian gas supplies were carried out in the EU via Ukraine. It should be kept in mind that Russia covers the demand for gas of Sweden, Finland, Lithuania, Latvia, Estonia and Bulgaria at 100%, of Germany -at 40%2.
Of course, there is also liquefied natural gas that is delivered by tanker from Algeria (14 billion cubic meters per year), Qatar (30 billion cubic meters per year) and Nigeria (12 billion cubic meters per year), but Europe should not expect a significant increase in imports in this case. The gas reserves are insignificant in Algeria and Nigeria, besides the domestic consumption of these countries is growing, there are serious internal political problems, and Qatar is focused on the rapidly growing market of the Asia-Pacific region to a greater extent.
The current leadership of the European Union comes from the fact that the presence of the dominant supplier of hydrocarbons -Russia, pumping its gas through Ukraine, the current transit monopolist, - creates significant risks to Europe's energy security. The issue rose sharply enough a decade ago after the Russian-Ukrainian gas wars in 2004 and 2006, when half of Europe was left without heat in the dead of winter.
The EU has developed its own criteria for energy security, which are in need of diversification, as well as overcome the over-reliance on a single supplier, and to ensure security of energy supplies. Europe intends to get access to three different gas sources for each country of the region through the construction of gas pipelines within a reasonable time.
Europe has come to the conclusion that the most promising among the alternative gas suppliers are the Middle East, the Caspian region and Central Asia. According to recent calculations, the reserves of the Caspian littoral countries (Azerbaijan, Turkmenistan, Kazakhstan) and Uzbekistan are 21 trillion cubic meters of gas. At present, only a small portion of these volumes is extracted, while Europe gets nothing3. The European Union has developed an ambitious plan of building an entire network of gas pipelines under the name of "Nabucco" in the region. However, serious investors considered the risks of construction excessively high, besides it was not clear what gas and in what volumes will flow through the pipe.
The European Union considers projects on terms more realistic and less expensive, after the failure of the ambitious "Nabucco". The idea of the Southern Gas Corridor has appeared, on which is expected to deliver gas to Europe from Azerbaijan, Turkmenistan and Northern Iraq, Iran (in the case of the lifting of sanctions), Israel and Egypt via Turkey and bypassing Russia. The estimated length of the pipeline is 3,500 kilometers.
The expansion of the South Caucasus gas pipeline "Baku-Tbilisi-Erzurum" is assumed under the project. Then gas will go to Bulgaria on The Trans-Anatolian gas pipeline (TANAP), which construction launched in April 2015. The Trans-Adriatic branch of the pipeline (TAP) will be built for further transportation of gas via Greece and Albania to Italy. Variant of the Trans-Caspian pipeline is also considered to bring gas from Turkmenistan to Europe. The declared cost of the project is about $ 45 billion.
Southern Gas Corridor project could also get caught up in negotiations and discussions, if it was not Russia, which became the catalyst for the beginning of its implementation. Moscow understood the danger of such a monopoly gas transit country like Ukraine. A plan
for the construction of a gas pipeline system for the transportation of Russian gas to bypass the western neighbor was developed and named on routes - the North and South Stream. The first branch of Nord Stream has been laid quickly and is already operating, the second is under construction.
As for South Stream, then Russia has had to abandon the project, because of the claims of the European Union. The EU considered that the pipeline did not meet the conditions of the "Third Energy Package", according to which the companies engaged in the extraction of gas, could not be owners of pipelines laid on the territory of the EU.
But "Gazprom" was not satisfied with this situation. At the same time, Russia did not give up the idea to deliver gas to Europe from the south, abandoning South Stream. The idea of "Turkish Stream" has arisen, which would provide gas transportation capacity of 63 billion cubic meters per year through Turkey. However, this project is at the concept stage only, not even a plan.
All this has forced Europe to revisit the Caspian region, first of all, Azerbaijan, which occupies the 10th place in the world reserves of oil and gas per capita. The country is able to produce gas at a stable level for more than 90 years. Gas production increased by 6 times in 10 years - it amounted to 5 billion cubic meters in 2003, and 29 billion cubic meters - in 2014.
Azerbaijan is very interested in the construction of the Southern Gas Corridor, as the country becomes a major supplier of energy to Europe. Furthermore, President Aliyev said that the project of energy security, laid the foundation of a new format of cooperation in Eurasia. It was created a trilateral format of the Turkish-Azerbaijani-Ukrainian partnership in the first phase in the energy, transportation, political, economic, strategic areas (referring to the existing gas pipeline Baku-Tbilisi-Erzurum). The accession of Greece, Albania and Italy to this
process will expand this format more and ultimately a very serious new format of cooperation is formed in the Eurasian region. Therefore, the Southern Gas Corridor is not just an energy project but a major political initiative5.
The field "Shah Deniz" will be used to supply gas to Europe, its proven reserves are 1.2 trillion cubic meters of gas and 240 million tons of condensate6. Initially, the development of the offshore field started in 1993, soon after Azerbaijan gained independence, and then it was called loudly: "Contract of the Century". Azerbaijan sent all the forces for development of the oil industry at the time - because its oil reserves are incomparably greater than gas and the priority has always been the development of the oil industry.
Only in December 2013, the project participants (the State Oil Company of Azerbaijan (SOCAR), BP, Statoil, LUCOIL, NICO, Total and TPAO) announced the adoption of the final financial decision on the second stage of development projects within the framework of the plan of the Southern Gas Corridor.
The construction of the Southern Gas Corridor is well under way at the moment7. Azerbaijan is not worried due to sanctions in the framework of the "Third Energy Package", because, firstly, it is not a gas producer and a transit country for gas at the same time, and secondly, it is not a 100-percent owner of both the field and the pipe, though SOCAR is the primary equity participant in the project NANAP (58%) (Turkish Botas - 30%, British BP - 12%). In addition, the European Commission withdrew the project Trans Adriatic Pipeline (TAP) from the application of the "Third Energy Package" for 25 years8.
It is expected that the gas in the amount of 6 billion cubic meters per year will be supplied to Turkey by the end of 2018 and first deliveries in Europe will begin in 2019, but the SGC, will reach full
capacity in 2020. Maximum capacity of the pipeline should amount to slightly more than 30 billion cubic meters of gas per year by 2026.
However, not all experts are optimistic in estimating the timing of the project. Many of them note, that neither Turkey (which claims to be the "energy hub" of Europe), nor Greece or Albania has the appropriate transit infrastructure, including facilities for the reception and storage of the planned volumes of gas. If the Turkish Stream starts work on a par with SGC, then Turkey will be in a difficult situation, since Ankara is not ready to accept such amount of gas.
The main problem of the project at the initial stage of its implementation is that supply of 10 billion cubic meters of gas per year from Azerbaijan will hardly change the structure of the European gas consumption. Moscow does not have to worry with such volumes of deliveries: it will remain the main supplier of gas to Europe in the medium term. But as for the long term, the EU will have access to richer in gas countries, such as Turkmenistan, Iraq and even Iran with the Southern Gas Corridor.
The reserves of Turkmenistan are estimated at 17.5 trillion cubic meters of gas, and it could become a major supplier of gas to Western Europe, joining the SGC through the Trans-Caspian pipeline. Emissaries of the EU, together with Azerbaijan have repeatedly discussed the prospects of cooperation in the gas sphere with the Turkmen leadership. However, Ashgabat feared a negative reaction not only from Moscow, but from Beijing. Turkmenistan is not ready to take risks, considering Chinese market a priority.
There is a possibility to connect the north-Iraqi gas fields (2 trillion cubic meters) to the Southern Gas Corridor in the long term, however, the north of Iraq - Iraqi Kurdistan is constantly drawn into regional war and on the brink of armed conflict because of chronic disagreements with Baghdad. So, the practical implementation of any
energy project comes up against security problems, even though Europe is interested in the existence of gas fields in northern Iraq.
As for Iran, where the world's largest gas reserves are (33 trillion cubic meters), it will take years to establish trade partnership with this country in the field of gas supply (in the case of the lifting of sanctions). Tehran is interested in the markets of its eastern neighbors, and will claim to the dominance of the European gas market, if happens to enter it. It is unknown, which leadership carries greater risks to Europe - Russia or Iran. So Iran is unlikely to fit into the concept of the Southern Gas Corridor in the medium term.
Israel (where large gas reserves have been discovered in the shelf) expressed readiness to export gas to Turkey on the existing pipeline for further delivery to European countries, but only if there is a settlement of the Cyprus issue.
Thus, Azerbaijan is the only reliable supplier of gas to the EU through the Southern Gas Corridor for today, but its gas resources are limited. Therefore, the Southern Gas Corridor can be considered as a long-term European project, which is more political in nature. Brussels seeks to show Moscow its real steps to find alternative gas suppliers, and demonstrates a willingness to oppose the monopoly of "Gazprom" in the European market.
It is difficult to undermine the position of Russia, but the leaders of the EU will continue the policy of a partial replacement of the Russian Federation of their gas market in the face of the current cooling of relations between Moscow and European countries. This is a serious challenge for the Russian government and "Gazprom", as the country's revenues are largely dependent on gas and oil. So Russia is constantly faced with the need to defend its export niches in the gas market of the EU and to actively seek new market opportunities for hydrocarbons outside Europe, primarily in the East Asian area.
References
http://1 news. az/item_id=20131224030940812&sec_id= 1 http ://inosmi.ru/20140312/218477006.html
http://www.wprr.ru/archives/category/truboprovod/yuzhnyi-koridor
http://haqqin.az/news/45090
http://ru.oxu.az/politics/77328
http://www.trend.az/business/energy/2417971.html
http://haqqin.az/news/45090
http ://korrespondent.net/business/economics/3421621 -v-baku-zalo...
"Rossiya i novye gosudarstva Evrazii. IMEMO RAN", Moscow, 2015, № 3, pp. 100-106.
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L. Gusev,
Ph.D. (Hist.), Senior Research Fellow, Analytical Center, Institute of International Studies, MGIMO (University)
BASIC DIRECTIONS OF COOPERATION BETWEEN RUSSIA AND KAZAKHSTAN IN THE FRAMEWORK OF EURASIAN INTEGRATION
The development of integration cooperation within the framework of the Eurasian Economic Union is an essential component of the strategy of Russia in the international arena. Kazakhstan is one of the key partners of Russia in the Eurasian integration. So, the strategic aspects of approach of the government of Kazakhstan to the development of Eurasian integration should be considered for further discussion on overcoming some of the contradictions that prevent the optimum results of Eurasian integration on the post-Soviet space [7].
Kazakhstan firmly supports the deepening of integration, however, this process is accompanied by the development of other "vector" of foreign policy (particularly in China and the Asia-Pacific region, the West and Islamic countries) [9]. This policy allows
