SOLELY A NEW SOURCE

While the world's attention was focussed on Minsk last week, where the heads of Ukraine, Russia, Germany and France were having a meeting regarding a settlement of the situation in Donbass, an event that was of no less importance to the future of Europe was taking place in Baku.

Maros Sefcovic, vice-president of the European Commission for the Energy Union and the ministers of the transit states - Georgia, Turkey, Greece, Italy, Albania and Bulgaria, as well as representatives of the Trans-Anatolian Gas Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP) came together at the first session of the Consultative Council on the Southern Gas Corridor (SGC) in Baku.

In view of the considerable importance to Europe of diversifying energy imports, the "Southern Gas Corridor" project does represent a new source of energy imports and a new route for supplies.

Moreover, as Azerbaijani President Ilham Aliyev noted at this session, it is precisely Azerbaijan's gas that will be solely a new source of imports for Europe in the coming years.

 "At the present time, diversification of energy resources is an issue that is being discussed in the main arena of international organisations. Azerbaijan is playing its part in this diversification. When speaking of diversification, we mean not only the supply routes, but also the sources of supplies. The diversification of supply routes is important too, but when the source of fuel imports remains one and the same, the situation does not change much.

It is important to diversify the sources of fuel imports. In the case of gas extracted in the Caspian Sea, in the years to come Azerbaijani gas will be solely the new source of gas for European consumers. Naturally, this creates a completely new situation," I. Aliyev said.

This was also confirmed by Maros Sefcovic, the vice-president of the European Commission for the Energy Union, as well, who noted that the "Southern Gas Corridor" is a priority for Europe at this moment, since the crisis in Ukraine is having a negative impact on Europe's oil and gas imports, in connection with which the EU is being forced to diversify the supply routes for fuel imports.

M. Sefcovic noted that those attending the first session of the Consultative Council had discussed the further advancement of the project and the problems that might occur in implementing it.

"The experts from BP [British Petroleum] and the rest of the companies explained what complications might arise in the process of implementing this project. We agreed that we shall work according to a plan of action drawn up by the European Commission in cooperation with all the ministers. For the EU the "Southern Gas Corridor" is the only one on which work is under way today," the vice-president of the European Commission said.

Meanwhile, the EU is already interested in doubling gas supplies along the Southern Gas Corridor at this stage, and this issue was also discussed at the session of the Consultative Council. Technically, the project is capable of delivering 10bn cu m of gas, but this figure can be increased to 20bn cu m. The "Shah Deniz" gas field has big possibilities," Sefcovic said.

Turkey and Georgia, which have long been Azerbaijan's regional allies in energy projects, are continuing to give all-round support to the Southern Gas Corridor project. According to a statement by Turkey's Minister of Energy and Natural Resources Taner Yildiz, "Turkey is completely resolved to implement the TANAP project, which is an important link in the "Southern Gas Corridor". Our stand on this issue is a consistent one, both on an economic and a political plane, the Haberler.com portal reported.

He noted that the TANAP is progressing ahead of schedule. If this project is to be successful, individual links in it must be completed on time. So, great responsibility lies with each of the countries that are a party to the project, the Turkish minister said. 

Georgia's energy minister, Kakha Kaladze, also pledged support for the "Southern Gas Corridor" project: "On the whole, we have talked about the problems that might arise in implementing the "Southern Gas Corridor". In its turn, Georgia promised that it was prepared to resolve any problems that might come up during the implementation of the project on that country's territory," the minister said after the session in Baku.

This resoluteness and unity among the transit countries would be beneficial to Europe too, as it needs Azerbaijani gas as well. But not everything is so rosy in the Old World. Azerbaijani President Ilham Aliyev mentioned this at the Munich conference on security held in early February. He noted that all the agreements on implementing the "Southern Gas Corridor" embracing the TANAP and the TAP, have been signed and are already being implemented.

"What do we need now? We need the work among all the members of this team to be constructively coordinated. In previous times we had regional cooperation. Azerbaijan, Turkey and Georgia were the only three countries to manage to implement the Baku-Tbilisi-Ceyhan oil pipeline project and the Southern Caucasus gas pipeline and railway, which will soon be commissioned.

Now that we have members of the European Union in our team, what we need primarily is coordination and efficiency. Sometimes the rules of European organisations take a long time to be effective, so we find ourselves having to deal with certain bureaucratic issues, but we do not have time to waste. This is because we need this project both as a producer, as transit countries and as consumer countries," Ilham Aliyev said.

At this stage, Greece has become the main trouble-maker. The Syriza Coalition of the Radical Left, which won the parliamentary elections in the country, is riding a wave of populist statements, in particular on the refusal to pay the foreign debt which amounts to more than 300bn dollars, and which has on the whole become a headache for Europe. But, once they received their ministerial portfolios, the members of the coalition became more pragmatic, attempting to restructure the debt rather than refusing to pay it. With regard to the Southern Gas Corridor, in particular one of its sections, the TAP pipeline, Greece, it seems, has also thought about changing the rules of the game. The Greek newspapers are writing that Greece's Minister of Productive Reconstruction, Environ-ment and Energy Panagiotis Lafazanis has come to Baku with a number of proposals.

So, if we are to believe the Greek press, the Syriza government intends to revise the previous treaty on constructing the TAP gas pipeline by putting up the transit tariffs and reducing the price of Azerbaijani gas to Greece.

In this connection, the separate meeting of Azerbaijani President Ilham Aliyev with the Greek minister, who was the only European minister to find time for an audience with the head of state, is worthy of attention. In principle, it is not the first time that Azerbaijan has been faced with changes of plans by partner countries owing to a change of government. After the parliamentary elections in Georgia in 2012, in which the "Georgian Dream" coalition came to power headed by billionaire Bidzina Ivanishvili who had become prime minister, he announced a little later that the construction of the Baku-Tbilisi-Kars railway line was causing them some issues. "We need to inform Azerbaijan that at the present stage in the construction this will not be of advantage to Georgia and we need a certain amount of compensation," Ivanishvili said, complaining at what was, in his opinion, a high price being paid for imports of Azerbaijani gas.

But a couple of days after his meetings with the Azerbaijani leadership in Baku, Ivanishvili drastically changed his views, after noting that there were no problems with the Baku-Tbilisi-Kars project and that his previous statements had been "hasty". As regards gas prices, Ivanishvili noted that Azerbaijan was supplying gas at the lowest prices and the margins for reducing the domestic tariffs needed to be sought in Georgia itself.

Therefore the uncompromising stand of the new Greek government may also be engineered in a normal direction considering the EU's very great interest in the "Southern Gas Corridor" project. 

You see, this pipeline opens up the way into Europe not for Azerbaijani gas alone, but also for the energy resources of the Caspian basin, primarily those of Turkmenistan. The subject of connecting Ashgabat up to the "Southern Gas Corridor" was discussed during a recent meeting of the foreign ministers of Azerbaijan, Turkey and Turkmenistan.

In this connection, Turkish Foreign Minister Mevlut Cavusoglu stated that Turkey and Azerbaijan had urged Turkmenistan to become a party to the implementation of the TANAP. Literally a few days after this tripartite meeting of foreign ministers, Russian Foreign Minister Sergey Lavrov held talks in Ashkhabad. The Russian press wrote that one of the subjects discussed was cooperation in the energy sphere.

But, whereas the Russian Federation purchased up to 40-45bn cu m of gas per year in the best years of energy cooperation, at the present time the volume has dropped to 10bn cu m, with a further possible reduction to 4bn cu m in years to come. This drop in volumes has forced Turkmenistan to actively turn to the Chinese market. But, although this trend is important for Ashkhabad, it does not offer the advantages that gas supplies to Europe do. First and foremost, this is a matter of price because Europe pays higher prices than China. On the other hand, Gazprom also intends to enter the Chinese market in the next few years, which will lead to greater competition, from which China will benefit.

Therefore, supplying gas to Europe will also allow Turkmenistan to diversify its gas sales' targets, which will be greatly to its advantage. It is quite possible that certain steps towards linking up Ashgabad to the "Southern Gas Corridor" may be outlined at the forthcoming meeting of presidents of Azerbaijan, Turkey and Turkmenistan this year.

Iran has, incidentally, offered its services in transporting Turkmen gas to Europe. "Our proposal is to receive Turkmen and Azerbaijani gas in Iran and then transport it to Europe via Turkey, since such a route is the most economical one for delivering gas to Europe," the IRNA agency reported, citing the director for international relations of the Iranian national gas company (NIGC), Azizollah Ramezani.

He said that preparations for organising the relevant infrastructure for the project could begin once the political obstacles have been eliminated. The variant is definitely not suitable for Azerbaijan since it is already creating the infrastructure for the "Southern Gas Corridor". For Turkmenistan the Iranian route would have to be postponed for a few years owing to persisting disagreements over all the issues pertaining to Iran's nuclear programme, as a result of which the latter country is still having Western sanctions imposed upon it.

On the other hand, they also understand in Ashgabad that the confrontation between Russia and the West may last for a long time and spread to other spheres, including gas imports. In these circumstances, it is important to get a place on the European gas market in plenty of time, which will substantially expand owing to the burgeoning cold war.

"Taking into account the potential of the Caspian, Middle East and Eastern Mediterranean regions, the EU is planning to increase the volume of gas imports in the long-term. In the future, the "Southern Gas Corridor" will be able to satisfy 20 per cent of the EU's demand for gas. At the same time, the European Union is developing a unified Central and South-Eastern Europe pipeline. The purpose of this is to further improve the connection between the 'Southern Gas Corridor' and European consumers," M. Sefcovic noted in an interview with the APA agency.

The "Southern Gas Corridor" does thereby become part of the common concept of an Energy Union created by the EU. One of the main aspects of the Energy Union is connected with security of supplies, based on solidarity and trust. Therefore the European Union is continuing its efforts to further diversify the routes and sources of energy imports. Azerbaijan, which will make a contribution to the "Southern Gas Corridor" and is a motive force in this project, can play a special part in achieving these aims," M. Sefcovic said.

Azerbaijan, which has already safeguarded energy security for its own region, in particular by getting gas supplies to Georgia and Turkey going, will become an important partner for Europe in diversifying both sources of energy imports and routes for delivering them. In the current century, energy supplies are acquiring too great an importance in the context of national security, which was stressed by Azerbaijani President Ilham Aliyev. Therefore energy policy is closely bound up with national interests and the global political map. The results of the session of the Consultative Council on the "Southern Gas Corridor" in Baku have confirmed this once again.

AT FIRST HAND

"Speaking of diversification, we have in mind not only import routes, but also sources of fuel imports. The diversification of routes is important, however, since, when the source of imports remains one and the same, the situation does not change much. It is important to diversify the sources of fuel imports. In the case of gas extracted in the Caspian Sea, Azerbaijani gas will be solely the new source of gas for European consumers in the years to come."

Ilham Aliyev, president of Azerbaijan