BAKU – The European Union is expecting Azerbaijan’s decision on joining the Nabucco gas pipeline project in late October, the EU’s top energy official said on a visit to Baku Wednesday.
Energy Commissioner Gunther Oettinger told a news conference that the international consortium developing the giant Shahdaniz gas field in Azerbaijan’s sector of the Caspian Sea will then pass a final decision on the routes for supplying gas produced during the second stage of the Shahdaniz project. Until then, he said, the EU will continue holding political dialog on the issue with Baku.
“This is an historic decision, and we understand that Azerbaijan needs time to make it,” Oettinger said.
First gas during the second stage of Shahdaniz development is to be produced in 2017. According to projections, gas production can be brought up to 25 billion cubic meters a year during Phase 2 of the project. The Shahdaniz field holds estimated reserves of 1.2 trillion cubic meters of gas.
Head of the state energy firm Socar, Rovnag Abdullayev, said earlier that Azerbaijan could export its gas to European markets by routes other than the Nabucco pipeline that offer “better terms”. Azerbaijani officials have also labeled recent terse Western calls for democratic reform in the country as attempts to pressure Baku over the Nabucco project.
Oettinger went on to say that the EU’s main goal in 2011 is to achieve long-term gas cooperation with Azerbaijan. “Certainly, this cooperation should be beneficial for both Azerbaijan and the EU.”
The energy commissioner said the EU was holding talks with all potential suppliers of gas for the Nabucco pipeline and simultaneously with transit countries. Oettinger said he would leave Azerbaijan for Turkey later on Wednesday to sign transit deals with the state-run pipeline company Botas and other firms.
Oettinger said the EU has also begun negotiating with Iraq’s new government on the Nabucco project, with the aim to secure Iraqi gas supplies to European markets through Turkey.
The commissioner said that at the same time talks were underway on Turkmenistan’s gas supplies to Europe. He said it was pivotal to create the required infrastructure, i.e. to lay a pipeline under the Caspian Sea, dubbed the trans-Caspian pipeline, which would link Turkmenistan with Azerbaijan.
The two Caspian littoral states are potential suppliers for the Western-backed Nabucco pipeline, which seeks to carry up to 31 billion cubic meters a year of gas across Azerbaijan, Georgia and Turkey into southeast Europe and onwards to an Austrian trading hub, bypassing Russia. According to the pipeline consortium, construction is due to start in 2013 and operations in 2017. The project’s participants include the Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE.
Addressing the annual Caspian oil and gas exhibition in Baku, Oettinger said Azerbaijan would play a key role in the Southern Gas Corridor of pipelines, acting both as a supplier and a transit state.
The Southern Corridor is a priority EU energy project diversifying supply routes and sources and increasing European energy security. It includes the Nabucco gas pipeline, Trans Adriatic Pipeline (TAP), White Stream, and Turkey-Greece-Italy (ITGI) pipeline. The Shahdaniz field is considered a key source for the Southern Corridor.
Oettinger noted that Europe currently does not have enough gas suppliers.
He also said that following the crisis over Japan’s Fukushima Daiichi nuclear power plant, gas has become a more attractive hydrocarbon resource.
“Europe currently imports gas from Norway, Russia and Algeria. The demand is increasing, therefore, Europe is looking into the prospect of importing gas from other regions. In this respect Azerbaijan could be both a supplier and a transit state.”