Is there green light for Nabucco Pipeline?

Is there green light for Nabucco Pipeline?

Minutes from Vugar Bayramov`s Speech

Crans Montana Forum

Brussels, June 24, 2011

Vugar Bayramov mentioned nthat demand for natural gas will rise from the current level of 500 billion bcm (in 2010) to 620 billion bcm in 2030 In Europe. European production is decreasing rapidly. The natural gas fields off coast of England for example supplied about 110 billion bcm in 2000. By 2020 only 10 billion bcm will be supplied.

He said that Nabucco will open a gas corridor that will create more competition and will contribute significantly to the diversification of gas sources in Europe.

Reducing Russian gas dependence Since 46 % of total European consumption is provided by Gazprom

Vugar Bayramov mentioned that potential suppliers of Nabucco are Azerbaijan, Turkmenistan and Iraq; Iraq’s gas reserves is 4.2 trillion cm and production is 3 billion cm. Azerbaijan’s gas reserves is 2,2 trillion cm, production is 29 billion cm. Turkmenistan is gas reserves 9,0 trillion cm and production is 42 billion cm.  Since participation of İraq and Turkmenistan in the first stage of Nabucco does not seem realistic, Azerbaijan has to provide Nabucco with min. 21 billion cm natural gas.

He listed Nabucco’s strategic objectives which are to open a new gas supply corridor for Europe and for the countries involved in the project, delivering very cost-effective gas sources; to raise the transit profile of the participating countries along the route; to contribute to the security of supply for all partner countries, and also for Europe as a whole; to strengthen the role of the gas pipeline grids of all the Nabucco partners by enabling them to connect with the European gas network

Vugar Bayramov said that there are certain benefits which Nabucco promise to Turkey are security of supply, limiting market risk for Turkey, more security, over 60% of the pipeline will be built in Turkey: Nearly 2,000 km of the 3,300 km of the Nabucco pipeline will be built on Turkish soil, Turkish industry to benefit, domestic savings and market integration.

Regarding to Azerbaijan’s position Vugar Bayramov references SOCAR Statement;  Nabucco is not alone in trying to obtain gas from the Shah Deniz II fields. Two other European energy projects are also in talks with the Azeri government: competing: the Trans Adriatic Pipeline, or TAP, and the Interconnector Turkey-Greece-Italy, or I.T.G.I.

He also focused what Nabucco promise to Azerbaijan; Azerbaijan has to select a route for the supply of gas to be produced during the second stage of developing Shahdaniz, the country’s largest gas field in the Caspian Sea.  According to projections, production will be brought up to 25 billion cubic meters per year under the second stage of Shahdaniz development, which is expected to produce first gas in 2017. The Shahdaniz field holds estimated reserves of 1.2 trillion cubic meters of gas. Existing pipelines don’t fit to transport Azerbaijan’s increasing gas to the world market. Azerbaijan exports 2 billion m3 gas to Russia, and the maximum power of this pipe is 6 billion m3. Azerbaijan exports 1 billion gas m3 to Iran and is not going to increase it. It has technical and political grounds. Baku-Tbilisi-Arzurum pipeline has a capacity of transporting 8,8 billion m3., and it it possible that in the following years, the amount will reach by 20 billion m3. in the best case ,which means Azerbaijan needs a new pipeline. ‘Nabucco’ is not just important in political but also in economic sense. Nabucco’ doesn’t not hold just economic but also political importance. ‘The project is in the political agenda of the West. This project is important for Azerbaijan’s European Integration. The decision of withdrawing from Nabucco has also political responsibility. In this sense finding alternatives for Nabucco doesn’t seem real either in economic or political sense.

He listed our main problems of realization of pipeline; determination of gas sources; price; ownership; political problems; alternative projects. What should be next are to have result-oriented negotiations, apparent investment plan, illumination of tariff and price and division of roles.

Conclusion Vugar Bayramov reaches is that Nabucco is priority of the West, still gas sources searching, there are hopes for realization of Nabucco and Azerbaijan’s participation at the project seems more likely possible.

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