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EU bets on SOCAR to reduce dependence on Russian gas

01.12.2012 - 11:51

Europe moved closer to energy security and diversifying its gas sources with the president of Azerbaijan's state energy company SOCAR saying his company is ready to move ahead with the Trans-Anatolian Pipeline (TANAP). Azeri-Turkish joint venture TANAP is expected to begin by carrying gas from the Azeri sector of the Caspian Sea with a possible later expansion to carry gas from Turkmenistan and other Caspian states. Azerbaijan's Milli Majlis ratified an intergovernmental agreement between the two countries on the pipeline recently.

On 23 November, SOCAR President Rovnag Abdullayev, in a meeting with British government officials in London, called for deepening ties between the countries as TANAP -- expected to be completed in 2018 -- emerges as a key route for future European gas supplies. TANAP will initially supply 6bn cubic metres per year of gas from Azerbaijan’s Shah Deniz field to Turkey, with further 10bn cubic metres per year crossing Turkey on its way to Europe.

Abdullayev noted that Azerbaijan is one of the main oil- and gas-producing countries in the world economy, which will be vital in the future to guarantee Europe's energy security. SOCAR owns an 80% share in TANAP along with Turkish-state owned minority partners.

TANAP is designed to carry natural gas from the BP-controlled Shah Deniz field in the Azeri waters of the Caspian Sea through Turkish territory to European consumers.

The project would cross through Turkish territory to the European border before it connects to either the Nabucco West pipeline or the Trans-Adriatic Pipeline (TAP) -- part of an effort by the European Union to reduce dependence on Russian gas supplies.

Azerbaijan’s Shah Deniz consortium is expected to choose to supply 10bn cubic meters per year from the project’s phase 2 to either Nabucco West or TAP by mid-2013.

TAP will transport natural gas from the giant Shah Deniz II development in Azerbaijan, taking it via Greece and Albania, and across the Adriatic Sea to southern Italy, and further into Western Europe. The project is designed to expand transportation capacity from 10bn to 20bn cubic metres per year, depending on supply and demand.

Nabucco West would bring Caspian gas from the Bulgarian-Turkish border to Baumgarten and beyond. Nabucco West is a modified concept of the Nabucco project. The concept foresees the construction of a 1300 kilometre pipeline that will run from the Bulgarian/Turkish border to the Central European Gas Hub. The pipeline is designed to transport gas initially from Azerbaijan and is fully scalable to meet future gas transport demand from the Caspian Region and Middle-East to the European markets. The Shah Deniz partners have an option to acquire as much as 50% of TAP.

SOCAR and its partners expect to have TANAP built before Shah Deniz starts production by 2017. First exports from the second phase of the Shah Deniz field are expected by 2018.

SOCAR in September offered to sell a 29% stake in TANAP to potential partners like BP, Norway’s Statoil and France’s Total.

Azerbaijan has one of the fastest-growing economies in the world and is seeking to boost ties with the EU. Brussels is pushing for the creation of the so-called Southern Gas Corridor to carry gas from the ample reserves of the Caspian and north Middle East through Turkey to markets in Europe.

As well as further enhancing European energy security, TANAP will also supply Turkey, whose gas demand is expected to exceed its current 51.8bn cubic metres per year in the next two years.