Azerbaijan backs gas pipeline for Europe
UPDATE: Expert: Nabucco shifts from stage of mythical talks to stage of realization
Azerbaijan has given its backing to a plan to send “substantial volumes” of gas to the European Union, potentially easing the bloc’s reliance on Russian supplies.
José Manuel Barroso, the European Commission president, hailed the agreement as a “major breakthrough” to improve the EU’s energy security, following a meeting in Baku with Ilham Aliyev, Azerbaijan’s president. “This agreement confirms Europe’s direct access to gas from the Caspian basin,” Mr Barroso said.
The joint declaration signed by the leaders could provide a boost to the proposed Nabucco pipeline, a 3,300-kilometer project that would bring gas from the Caspian basin to Europe via Turkey. A consortium including Germany’s RWE and Hungary’s MOL, among others, is expected to decide this year whether to press ahead with the €7.9bn project. A key consideration has been the ability to lock up sufficient gas supplies.
The purpose of Mr Barroso’s trip, which will take him to Turkmenistan on Saturday, was to lobby on Europe’s behalf amid growing competition from China and Russia
Commission officials acknowledged that the declaration, which required months of negotiation, was only a first step. Before any gas can flow, companies will have to strike commercial agreements with the investors developing Azerbaijan’s massive fields. But winning a political commitment from Mr Aliyev was a necessary pre-condition, they argued. “We’ve locked the Azeris in,” one EU official said.
Under the declaration, the two sides commit to making the so-called southern gas corridor operational as soon as possible, with Azerbaijan serving as a “substantial contributor”. In addition to Nabucco, the corridor includes other proposed projects, including the Trans-Adriatic Pipeline, White Stream and Interconnector Turkey-Greece-Italy. Yet the commission believes Nabucco is the most strategically significant because of its size and scale, and has committed €200m in start-up funding.
The declaration also urges investors in Azerbaijan’s massive Shah Deniz II field to move quickly to allocate its gas - a process they are expected to conclude by the end of March. The field, which counts BP as an investor, could supply some 16bcm of gas per year, according to estimates. Nabucco’s capacity would be 31bcm, although it could begin operation with lower volumes.
The EU imports about three-quarters of its gas, a proportion that is expected to increase amid dwindling domestic production. The bloc has made it a priority to diversify its energy supplies after being stricken twice in the past five years by gas cuts from Russia, its biggest supplier. The most recent incident, in 2009, left thousands of citizens in southeast Europe without heat or electricity in the middle of winter.
Articles from FT.com
Copyright The Financial Times Limited 2011
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