TAP is catalyst for Southern Gas corridor development
One can truly call the current week as being historic for the European gas market. A decision was made that gas from the energy rich Caspian region will be delivered to the European markets in the near future for the first time in history, thus ensuring the EU countries receive an alternative and absolutely new source of supply.
In particular, the matter rests in the Azerbaijani gas and the choice of a pipeline by the consortium developing the Shah Deniz field, through which it will be supplied.
Despite that currently there is no official statement on the choice of the route from the consortium or the consortiums developing two competing projects in this issue - Nabucco West and Trans Adriatic Pipeline (TAP), there is information about these pipelines from OMV Company. In its statement this Austrian company which is one of Nabucco West's shareholders, announced that its project was not chosen as a pipeline route for Azerbaijani gas transportation to Europe.
This means TAP can be considered as a winner in the competition for Azerbaijani gas. This project envisages gas transportation from the Caspian region via Greece and Albania and across the Adriatic Sea to southern Italy and then to Western Europe, while the main markets of the Nabucco West project are Bulgaria, Romania, Hungary and Austria.
The Azerbaijani side has repeatedly stated that only one project will be chosen. Taking into account that both pipelines had advantages, one can assume that the choice was not easy.
With this in mind, it is not so much important which pipeline has been selected, but the choice of European route for the supply of Azerbaijani gas. This selection marks the start of implementation of the Southern Gas Corridor project that will allow Europe to diversify its supply sources and increase energy security as well as enable Azerbaijan to acquire a new market in the face of Europe.
This important step will also give an impetus for the rapid implementation of all projects in the Southern Gas Corridor chain. An important and also the most difficult in all endeavours is the first step and the natural gas market is no exception in this area.
The Southern Gas Corridor is a major project designed to meet the European gas needs for decades to come. The active involvement of the EU and the importance that it attaches to the corridor signifies the project's importance for European consumers.
Moreover, despite the fact that the initial volume of supplies to Europe through this route amount to 10 billion cubic meters per year, this corridor's possibilities for transportation are not limited to this figure.
Over time, the ability of the Southern Corridor to bring new sources of supply to European markets is likely to extend beyond the immediate areas transited by TAP.
This means that in the end, both pipelines - Nabucco West and TAP, can be built to meet the growing European demand for gas. While Azerbaijan is in the early stages of developing its gas resources, the production potential of the country is really high.
The Shah Deniz gas condensate field itself is an example of this. The initial steps were to pipe some nine billion cubic meters a year of gas from the Caspian to Georgia and Turkey. Shah Deniz 2 will nearly triple that volume and extend the pipeline connection from Azerbaijan beyond Turkey into Europe.
Azerbaijan's gas production capability is expected to increase dramatically as fields like ACG Deep, Absheron, Umid and Shafag-Asiman are developed and a pipeline route towards Austria might be a natural market for this gas.