WHAT TO DO WITH NABUCCO?

The choice of the Trans-Adriatic Gas Pipeline (TAP) as the main route for the export of Azerbaijani gas to Europe raised a lot of questions. TAP beat its strongest rival Nabucco West, which had received considerable political support from the EU. However, now many experts confirm that given the commercial conditions of the two projects, the choice of the Sah Daniz consortium was correct. The director of the energy policy project at the Warsaw Centre For Eastern Studies, Agata ?oskot-Strachota, shared her vision of the situation with R+.

- How would you comment on Azerbaijan's choice of TAP, not Nabucco West, for the export of Caspian gas to Europe?

- It somehow fits into present situation on the EU gas market - depressed demand, relatively high prices, problems of European gas companies - all that requires a more realistic and cautious approach to investments which are to be made. I'd say that TAP was a pragmatic choice. TAP seems a commercially more viable choice especially in the short to medium time perspective, offers a shorter route to the EU market, is cheaper and has the operator of the Sah Daniz gas field (Statoil) onboard, which increases its chances for construction. Additionally, SOCAR is to become a shareholder of Greek DESFA, which gives the company greater control over the flow of Azeri gas. Nabucco West was directed towards Central Europe, which is a smaller gas market than Italian and which is currently engaged in several other, although mostly much smaller, diversification and/or infrastructural projects (be it LNG projects, shale gas ones, nuclear plans, interconnectors, etc). Additionally, reaching the Central European market could mean greater controversy/competition with Russian Gazprom, which is a dominant supplier there (and which - mostly due to present difficult market conditions - is much more open to offer better conditions of gas supplies).

- Is Nabucco West a dead project or do you, as some experts, believe in its future?

- For the nearest future it certainly is unfeasible. In the longer time perspective - when EU gas demand grows, when additional gas sources in the region (e.g. in Iran) become available for Europe, etc - it could come back on the table but would require substantial changes to make it a commercially attractive route for gas suppliers. In that context, the choice of TAP has substantial consequences for the feasibility of goals of EU energy policy in the region at least in the next few years. It will not bring diversification to Central and East European member states, and in the current market situation - having in mind all alternative sources of gas on the Italian market - it is unlikely to grow into a real "corridor".

- By the way, there is an opinion that Azerbaijan's decision in favour of TAP was taken in consideration with Russia's presence on the Central European gas market. Are Azerbaijan and Russia real rivals in energy export to Europe or not?

- I think that while making such a strategic decision Azerbaijan must have been acting quiet rationally and so must have been considering the interests of its most important partners and neighbours and analyzing how its decision could influence its relations with them. And Russia certainly is both one of the most important neighbours and partners of Azerbaijan. I assume also that it could be very difficult for a new entrant on the EU gas market to compete directly with the world's biggest supplier. So the choice of TAP is quite understandable in that context.

- Some media believe that Azerbaijan's decision against Nabucco West may cause some problems with its relations with the EU and that Baku can no longer rely on the EU's support in the Karabakh dispute. What do you think about it?

- I would not be that pessimistic. But I think that recent developments with regard to the Southern Corridor - a strategic project of EU external energy policy, the choice of TAP being one of the most important of them (but earlier decision on TANAP construction, etc) show clearly the limits of EU policy in the region.

- Azerbaijan aims to change the energy map of the region. How would you describe Azerbaijan's energy policy?

- As I said earlier - I think that Azerbaijan's energy policy is quite pragmatic. With regard to its export outlets/projects, it is mainly linked with Turkey and its energy policy objectives, which may present both a chance and a constraint to feasibility of part of its goals.