The European Union is more active lately in searching for new sources of natural gas, motivated in no small part by its rocky relations with Russia over the Kremlin’s involvement in Ukraine. The EU’s Southern Gas Corridor project to bring gas from the Caspian Basin to Europe is getting new attention and taking on increased importance, which can be seen in the increased contact among officials from the EU, gas exporters Azerbaijan and Turkmenistan, and transit countries Turkey and Georgia.
To find out where the EU is currently in its efforts to open the Southern Gas Corridor (SGC), Qishloq Ovozi was fortunate to be able to interview Maros Sefcovic, the vice president of the European Commission “in charge of energy union,” who is currently spearheading the EU’s efforts to realize for the SGC.
For background: The EU’s imports of Russian gas have been decreasing for several years, but Russia remains the EU’s single largest source of gas imports. In 2014 those gas imports amounted to somewhere around 140 billion cubic meters (bcm), down about 9 percent from 2013 but still representing some 30 percent of the EU’s gas imports.
In March, Sefcovic joined the presidents of Azerbaijan, Georgia, and Turkey at a groundbreaking ceremony in Kars, Turkey for the beginning of construction of the Trans-Anatolian Pipeline (TANAP). TANAP is the first of what the EU hopes will be a series of pipelines connecting suppliers not only from the Caspian Basin but possibly the Middle East also, to markets in Europe.
Sefcovic said he was pleased at “how much we have progressed over the last few months with the Southern Gas Corridor.” He mentioned that the now-abandoned Nabucco gas-pipeline project, once backed by the EU as the backbone of the SGC, was instructive for the EU. “We are trying to learn lessons from the Nabucco project, where it was quite clear [that] lack of political attention was one of the reasons why we have seen the problems piling up and in the end led to the disinterest of the business community in supporting this project” he said.
Sefcovic said this time the EU has “established an advisory group [that] consists on the one side, [of] the representatives of the consortium, and on the other side, [of] the political representatives of all countries through which the Southern Gas Corridor should be routed in the future, to take care of the practical day-to-day problems.”
The first gas to reach Europe through TANAP will all come from Azerbaijan. However, TANAP’s initial capacity of 16 bcm, 6 bcm of which is earmarked for Turkey, will eventually increase to some 60 bcm. Azerbaijan cannot produce that much gas for export, so Turkmenistan, with more than 17 trillion cubic meters of gas, is an obvious choice to contribute to TANAP.
Reports in March mentioned Sefcovic would soon be visiting Turkmenistan to discuss construction of the Trans-Caspian Pipeline (TCP). Tentatively, the TCP would bring some 30 bcm of Turkmen gas across the bottom of the Caspian Sea to Azerbaijan, where it would be pumped into existing pipeline networks leading west.
“We see that there is also interest from Turkmenistan to be closer associated with this project,” Sefcovic said and continued, “So I sent a letter to the Turkmen side to reconfirm the intention of the European Union to enter into a memorandum of understanding with Turkmenistan and Azerbaijan, [on] how we can cooperate better on creating the possibilities for Turkmen gas to be shipped towards Europe.”
“We are ready for talks, we are ready for constructive discussions, and I believe this is the case also on the Turkmenistan side,” he said.
It was pointed out that Turkmenistan has often expressed an “interest” in shipping its gas through various proposed pipelines but in the end delays committing to projects. Sefcovic conceded, “I do not have all the details on how they are progressing in their assessments of economic viability and the future of these projects” but he added, “therefore we would like to engage with Turkmenistan a little bit more just to really discuss with them the prospect of the gas supply from Turkmenistan to the European Union.”
Working in the EU’s favor is the probability Turkmenistan’ East-West gas pipeline will be completed this year. The pipeline runs from the gas fields in eastern Turkmenistan to the Caspian coast and will eventually carry, coincidentally, some 30 bcm. When construction started the pipeline was intended to feed the Russian-backed Prikaspiisk pipeline along the eastern Caspian coast to Russia but that project has been scrapped, freeing the gas up for export elsewhere.
Interestingly, though representatives from Kazakhstan and Uzbekistan were invited to Nabucco conferences and the EU meeting in Prague in 2009 when the Southern Corridor was unveiled, Sefcovic indicated the EU is not currently considering those two Central Asian countries as gas suppliers.
Sefcovic did mention another country that could be a supplier. “We are also hopeful that the diplomatic positive developments with Iran would continue and then of course you would have another potential supplier for Europe with very, very significant reserves of gas.”
In the Nabucco project’s plans there was a proposed branch line extending to the Iranian-Turkish border as well as the Georgian-Turkish border.
And concerning Georgia, Sefcovic made special mention of the country as “a very important partner for the Southern Gas Corridor.” He said, “It’s quite obvious [Georgia’s participation] is very important for Azerbaijan but also for Turkey when it comes to the energy cooperation and to the energy trade, and I think that Georgia would play a key role also in this future energy cooperation.”
Of course, there will be complications, the biggest are likely to come from Russia, no surprise, since the SGC will take a large chunk out of Russia’s gas exports to the EU, accompanied by a significant reduction in revenues for Russia’s state coffers. Moscow has, for example, continually pointed to the unresolved legal status of the Caspian Sea as a reason no pipelines should be built across it without the approval of all five littoral states (Azerbaijan, Kazakhstan, Iran, Turkmenistan, and Russia).
Sefcovic was aware of this and “we of course are also discussing various [Caspian] issues of the situations with Russia,” but he said “we are currently discussing mostly in trilateral format together with Ukraine and of course we are focusing on how to make sure that this trilateral cooperation between Russia, Ukraine and European Union in the gas sector is working well and that the positive experience we had with the winter package of last winter could be extended further so we could have another winter without any gas dramas in Europe.”