Articles

The transit Azeri gas and the developments in the East to West gas pipeline projects

The developments regarding the Trans-Adriatic Pipeline (TAP) project, that recently grabbed attention, mostly by the introduction of the German energy giant EON in the project, are to be coupled by the immediate access of Azeri gas through Turkey to Europe.

More specifically, the Vice President of Statoil, Mr. Rune Bjornson, has recently stated in a press conference in Brussels that Turkey and Azerbaitzan are due to sign an agreement by which natural gas from the latter will flow in a transit form in the territory of the former.

That of course has as an immediate consequence the exploitation of the Shakh Deniz 2 gas field in which Statoil has a stake and has estimated production capacity of 16 billion cubic meters per year. According to Mr. Bjornson, the field will be ready for production by 2017 the latest.

The pipelines projects, such as TAP and ITGI, are scheduled to deliver that gas to Europe. Currently the Shakh Deniz 2 is being exploited by a consortium in which BP has 25.5%, Statoil 25.5%. Total 10%, SOCAR 10%, Lukoil 10%, Naftiran 10% and TPAO 9%.

In order for the ITGI to fully function, quantities of gas of around 11 billion cubic meters per annum are required. Equivalent amounts of gas are also required for the TAP. Moreover, according to the Greek energy analyst Haris Floudopoulos, the Greek gas company DEPA has approached Total and have negotiated the possibility for the ITGI to gain long-term access to the Shakh Deniz field. Currently DEPA is in agreement with the Turkish BOTAS to import Azeri gas and in 2009 it bought 715 million cubic meters. In addition DEPA has recently signed a deal with the Azeri SOCAR to directly import 500 million cubic meters from the latter and this agreement can be implemented as soon as the Turkish authorities sign a transit deal with the Azeris.

Until now the main reason for Turkish refusal to form a final agreement with Baku, was Ankara's will to keep 15% of the transit gas through their territory as a fee, something that SOCAR was not willing to agree upon.

Finally, the TAP project seems to gain further momentum from the above, not only because of Statoil's heavy investment in the Shakh Deniz field, but also because of the latest statements of Mr. Hans Schulz, the Chairman of the EGL company that currently holds 50% of TAP, a percentage that will be decreased after EON's entrance. He stated in Brussels that “TAP is a project near its completion regarding technical and licensing procedures and is expecting new partners to enter its scheme".

According to the Athens-based IENE energy institute, the Turkish-Azeri agreement that will provide a boost for both ITGI and TAP, will be signed on the 8th of June and it will constitute "A major development from all aspects, either business of geopolitical, concerning the energy future of Southeastern Europe".

The development has a serious geo-economic angle but also a geopolitical one, since the TAP pipeline was initially scheduled to transfer Iranian gas to the EU. If the above culminations continue that will decrease the chance of Iranian produced natural gas being traversing Turkey and then up to the EU states, since Azerbaitzan can fullfill the needs of the pipelines according to all available data. Therefore the coming period is crucial wherther or not the transit agreement between Baku and Ankara, reveals a wider political issue and that is the access of Iran to the energy markets of the West.