Azerbaijan chooses Greek corridor for its natural gas flow to EU

José Manuel Barroso, President of the European Union (on the right), received Ilham Aliyev, President of Azerbaijan. Discussions mainly focused on energy issues. (EC Audiovisual Services 21/06/2013).

Azeri officials are visiting Athens today to announce their choice of the ‘Greek corridor’ for the flow of their natural gas towards the central European Union countries, to reach them after crossing also the Adriatic Sea in a deep water pipeline to Italy. Let’s folow the facts.

Very early last Monday morning the European Sting writer, Maria Milouv, predicted that the Azeri natural gas expected to flow from the gigantic production field Shah Deniz II will reach the central European Union countries after crossing northern Greece and the Adriatic Sea to Italy (Trans Adriatic Pipeline-TAP). Milouv noted “Now the fact that the Greek authorities have agreed with the Azeri government to sell the Greek operator of the country’s natural gas system DESFA to Socar (Azeri state oil and gas company), it is easy to imagine which option of pipeline Baku will make. It will be obviously the Southern Gas Corridor-TAP pipeline. Both the EU presidents express loudly their joy for this prospect”.

They choose Greece

The choice is between Nabucco-West and TAP. The Nabucco project also starts from Turkey and crosses the Balkan Peninsula, but it heads north-westwards away from Greece. The Shah Deniz developers consortium made up from BP, the Azeri state oil company, Socar, and the French Total is expected to announce its choice of pipeline towards the end of this month.

However yesterday high-ranking Shah Deniz executives said in Baku they are heading to Athens on Wednesday to meet Prime Minister Antonis Samaras and government officials, to announce their choice of pipeline. Obviously if it wasn’t for TAP they wouldn’t go to Athens to meet half the government and tell them, ‘sorry it’s the other route’.

Last Friday 21 June Ilham Aliyev, the President of Azerbaijan was in Brussels and met with the two EU presidents, Manuel Barroso and Herman Van Rompuy. After meeting Aliyev both of them issued Press releases with extended references to the Southern Gas Corridor-TAP pipeline. Again, if a decision wasn’t already taken for the TAP pipeline, Barroso and Rompuy would have refrained from pointing to the TAP.

Theoretically the European Union favours the Nabucco option but it has no problem at all, if it will be the TAP. In reality the plan for the TAP looks much more realistic than Nabucco. TAP is meant to warm up the European Union by covering 10% of its needs in natural gas. It will effectively diversify European supply sources greatly reducing the dependence of Russian natural gas. Everybody remembers that in January of 2009 the Russians, for a second time after 2006, cut off again the supplies to a number of EU countries, over a dispute with Ukraine, through the territory of which the Russian gas flows to reach the EU.

The TAP pipeline however passes through the EU member state Greece and is owned by the Swiss AXPO (42.5%), the Norwegian state entity Statoil (42.5%) and the German gas distributer E.ON Ruhrgas (15%), all of them quite reliable European ‘giants’. More than 10 billion cubic metres of Azerbaijani natural will be delivered annually to EU countries through this Southern Gas Corridor-TAP. It will constitute the main alternative supply line for Europe, offering a strong bargaining argument vis-à-vis the Russian natural gas suppliers, in respect with prices and conditions.

At this point it should be mentioned that the position of the Russians as main suppliers of Europe in natural gas has already weakened and prices have started to fall. Alternative supply sources mainly in liquefied natural gas (LNG) have grown rapidly reducing the degree of European dependence on Russian fuel. Poland has recently managed to strike a new deal with the Russians for long-term deliveries at significantly lower prices. It is a fact now that Moscow negotiators have abandoned their uncompromising attitude of the past and are more prone to pressures.

This new development with the Azeri natural gas supplies through Greece and the Adriatic Sea, despite the fact that it’s not easy yet to set a time for the first delivery, it will weight in favour of the EU. Those things are strategic and cast their shadow long before and after their realisation.