Providing Europe with Caspian Gas is Impractical
The idea of turning the Caspian region into a key world provider of oil and gas is still far from implementation. The intrinsic reason for this is the fall of production instead of its growth.
Each country in the Caspian region is after playing its own game. Turkmenistan is increasing deliveries to China and Kazakhstan dreams of liquefied gas exports. The most powerful player of the region is Azerbaijan with its gigantic Shah Deniz gas field which is planned to be used in filling the pipes of the Nabucco West (a shortened version of Nabucco) and the Trans-Anatolian pipeline. There is also a Trans Adriatic pipeline project. All of them are bound for Europe and are meant to meet the requirements of European consumers saving them from cold. Another aim is to comply with the ambitions of those EU leaders who are worried by Gazprom’s expansion and Russia’s looming gas blackmail. However, so far these European projects have no achievements to boast of, oil and gas expert Valery Nesterov from the Sberbank CIB company says.
“Kazakhstan is practically never considered to be a supplier of gas to Europe. Azerbaijan has some prospects of increasing the supplies but they are restricted. As for Turkmenistan, all its gas goes to China so far. There are also plans of increasing deliveries to Iran. Europe is likely to be more interested in liquefied natural gas now. And naturally, it will never decline deliveries of Russian gas.”
Caspian suppliers of natural gas to Europe could miss their target. The reason is not so much competition on the part of Russia as a trivial shortage of money for developing gas fields, modernizing the old pipes and making new ones and buying gas from partners to fill the pipelines. This is compulsory because even Azerbaijan’s own reserves could be insufficient. Valery Nesterov describes all possible versions of filling the Azerbaijani pipeline.
“Azerbaijan could get some gas from Turkmenistan and Kazakhstan. However, there are some problems associated with building a pipeline under the Caspian Sea. They are more likely to think about exporting liquefied gas but those are very expensive projects.”
In this situation BP was entrusted with developing Azeri-Chirag-Guneshli, the Azerbaijani sector of a complex of Caspian oil fields. The Brits promised the moon and the stars at first, meaning enormous volumes of oil and gas. However, it turned out later that the reserves were not so large after all. BP alleged technical problems and Azerbaijan accused the international company of incompetence, complaining about the underpayment of $8bln. But however strong the competition of Caspian gas with Russian deliveries could be, the European demand will exceed the offer of all suppliers on the market. Independent gas analyst Dmitry Lutiagin feels optimistic.
“The Russian policy and that of the Caspian region countries do not cross over. Russian gas goes to Europe and finds its consumers there. It is true that we are reducing the deliveries but this is caused by the consequences of the economic crisis. As for gas volumes that European countries could consume, they in any case exceed the potential volumes that Russia and the Caspian region countries taken together could provide.”
We can be sure that the gas reserves are large enough to satisfy everyone, both Russia and its potential competitors from the Caspian region. Hopefully, the gas prices do not fall. They have remained on a good and stable level over a few years.
Source: Voice of Russia