BP, a British energy company, puts forward a proposal for “a downsized Nabucco” – a pipeline delivering gas to Europe. The agreements, signed in Izmir on October 25 this year, on gas supplies between Azerbaijan and Turkey inevitably brings closer the moment of creating a transit route bypassing Russian territory.
On October 25 in Izmir, an agreement on transporting Azerbaijani gas to Europe through Turkey’s territory was signed in presence of Azerbaijan’s President Ilham Aliyev and Turkey’s Prime Minister Recep Erdogan. Negotiations concerned resources from Azerbaijani deposit within the Shah Deniz field under the Caspian Sea.
The consortium of gas producers operating the Shah Deniz project – of which BP has a controlling share – has been planning starting its second stage, called Shah Deniz II, for a long time. The investment, aimed at continuation of commercial gas extraction, is to engage an amount of USD 20 billion. The opening date has been rescheduled due to a lack of final agreement on gas transit between Azerbaijan and Turkey.
A change of strategy
As for today, after the Izmir meeting the aforementioned obstacle seems to be overcome. The agreement defines 2017 as a year of initiating the transportation of Shah Deniz’s 10 billion cubicle meters of gas through Turkey. So far the EU’s pipeline Nabucco has been to transport gas from the Caspian Sea basin to Europe. The Union project has aimed at building 3,300 kilometers of a pipeline linking Azerbaijan and Austria, with a gas transport capacity of approximately 31 billion bcma (cubicle meters per annum), which would cost more than EUR 9 billion. However, recently BP has proposed a new revised version of the pipeline – “a downsized Nabucco.” It would use an existing transit infrastructure to deliver gas to BOTAS, a Turkish company, and add segments connecting separate sections of Turkish pipelines. Such a solution would allow BP to avoid high costs of building a whole pipeline. The British concern is proposing 1,300 kilometers of special segments – enabling gas transportation from Azerbaijan to Turkish borders with Greece and Bulgaria – instead of 3,000 kilometers of a brand new route.
The reconfigured project from BP, besides cutting costs, is reducing the transit capacity threefold. The downsized Nabucco would be able to deliver 10 billion bcma of gas. It occurs that building the “light version” would basically not influence the balance of energy in Europe. The EU dependence on Russian gas would remain intact. In the Izimir agreement there is a paragraph on increasing capacity of the present infrastructure accordingly to expanding export of gas. Nevertheless, no strict regulations concerning actual investments were specified.
Turkey – a transit power
According to Jamestown, a US analytical centre, the Izmir agreement removes last legal barriers against Azerbaijani gas delivery to the EU through Turkey. Yet there is a question how much gas would be actually transported to Europe. Azerbaijan agreed on producing 6 billion bcma of gas for Turkey. As long as the Shah Deniz II project would not achieve its maximum efficiency, there might be not enough resource for Europe. Still, Azerbaijan remains the main energy partner of the EU in the region. The biggest beneficiary of the EU plans is Turkey, which major pipelines, i.e. Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum, are the best examples, together with the re-designed BP’s future project. In the field of energy, the European Union, in its attempt to bypass Russia, might become dependent on Turkey. This country is gradually turning into a centre connecting gas transit routes vital to Western Europe.
The new proposal of BP fits into a broader concept of the Southern Gas Corridor linking the region of the Caspian Sean basin and European Union. The pipelines planned within the frame of this project are to deliver gas to European consumers without engaging the Russian transportation system. The Corridor might include several pipelines, such as IGI Poseidon, Trans Adriatic Pipeline, ITGI, White Stream and Nabucco. The European Union has made this project one of the priorities within its energy policy.