Azerbaijan enjoys opportunities to supply gas to Europe

Azerbaijan has all opportunities for supplying gas to Europe, the Foreign Affairs Minister of Azerbaijan Elmar Mammadyarov said in an interview to the Wall Street Journal. “Technically it is possible and from the financial point of view is also one of the good ideas -not spending a lot of money,” he said. He explained that one idea to bring his country’s gas to Europe is to build a dedicated pipeline across Turkey to the border with the EU.

It would then split up in two branches, one toward Greece and one to Bulgaria, where it would split even further, “like a Christmas tree,” feeding Central European countries and the Balkans until it reaches Austria, the site of one of the biggest European gas hubs, Mammadyarov said.

He believes ITGI is still the most advanced project, but the financial crisis that’s taking a heavy toll on Greece and Italy is raising concerns about the future gas demand in these two countries. He didn’t elaborate on TAP, which also has Italy as its ultimate market.

Three projects-Nabucco, the Interconnector Turkey Greece Italy (ITGI) and the Trans Adriatic Pipeline (TAP)-have been competing for years to transport the gas from Shah Deniz II field, that is being developed by the consortium of BP PLC and Norway’s Statoil ASA. The consortium is expected to decide which pipeline project to use to carry the gas to Europe in the first half of 2012.

BP put forward another project, called the South-East Europe Pipeline, which would move the gas from the EU-Turkish border all the way to Austria, feeding the markets of Central and Eastern Europe, and possibly the Balkans.

The pipeline would have a similar route to the bigger and potentially more expensive Nabucco, which would cost more than ?8 billion. But the innovative idea would be that the capacity of the pipeline declines as it makes its way through Europe, leaving gas in the national gas markets it crosses on its way up to Austria. Caspian gas is key for Europe’s efforts of increasing its energy security by diversifying supplies away from Russia.