Southern Gas Corridor

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The layout of the different pipelines in the Southern Gas Corridor Southern Gas Corridor.png
The layout of the different pipelines in the Southern Gas Corridor

The Southern Gas Corridor is an initiative of the European Commission for a natural gas supply route from Caspian and Middle Eastern regions to Europe, proposed in 2008. The goal of the Southern Gas Corridor is to reduce Europe's dependency on Russian gas and add diverse sources of energy supply. [1] The route from Azerbaijan to Europe consists of the South Caucasus Pipeline, the Trans-Anatolian Pipeline, and the Trans Adriatic Pipeline. [2] The total investment of this route is estimated US$35 billion. [2] The main supply source would be the Shah Deniz gas field, located in the Caspian Sea. [3]

Contents

History

The European Union is dependent on other countries' supply sources of energy; in 2017 around 54% of the EU's gross inland energy consumption came from imported sources. [4] Russia has been the main supplier, despite its recent decline, in natural gas, coal and crude oil for a number of years. Russia's dispute with transit countries is a reason for concern regarding the reliance on the country's imports.

The initiative was proposed in the European Commission's Communication "Second Strategic Energy Review – An EU Energy Security and Solidarity Action Plan" (COM/2008/781) in 2008. [5] [6] The European Union identified a number of partner countries for this initiative, such as Azerbaijan, Turkey, Georgia, Turkmenistan, Kazakhstan, Iraq, Egypt and Mashreq countries. Uzbekistan and Iran should represent, when political conditions permit, a further significant supply source for the EU. [6]

There have been numerous conferences revolving around the project. On 8 May 2009, the summit "Southern Corridor – New Silk Road" was held in Prague, addressing the purpose of the corridor. [7] In 2015, a Southern Gas Corridor Conference was hosted at the University of Houston, Texas. Representatives from gas companies, consulates, and other organizational authorities participated in developing relations and calculating productions. The countries that were represented at the conference were the United States, Azerbaijan, Turkey, Greece, and Italy. [8]

The fourth meeting of the ministers within the Southern Gas Corridor Advisory Council was held in Baku on 15 February 2018. Albania and Azerbaijan agreed to establish a new company to create project of the Ionian - Adriatic Pipeline (IAP). [9] [10] SOCAR and Albgaz company of Albania, as well as gas distributing companies of neighboring countries such as Montenegro and Croatia signed two documents related to design of new pipelines. This project will connect to the Southern Gas Corridor. [9] [10]

The opening ceremony of the Southern Gas Corridor took place at the Sangachal Terminal with the participation of Ilham Aliyev on 29 May 2018. [11] [12]

The opening ceremony of the Trans-Anatolian gas pipeline took place in Eskisehir, Turkey with the participation of Presidents of Azerbaijan, Turkey and Ukraine on 12 June 2018. [13] [14]

On 15 November 2020, the Trans Adriatic Pipeline began commercial operations. [15]

Technical description

In the Trans-European Networks – Energy (TEN–E) program, the European Union designated three of the pipelines as of strategic importance (ITGI, Nabucco and White Stream)." [16] Also the Trans Adriatic Pipeline was identified that time as a Southern Corridor project. [5] It was planned that the Southern Corridor projects could provide the necessary transportation capacity to deliver 60–120 billion cubic metres per annum (2.1–4.2 trillion cubic feet per annum) of Caspian and Central Asian gas directly to Europe. [17]

As of 2017, the corridor would pass through Georgia, Turkey, Greece, Albania and Italy and consists of three main projects:

This combination of these pipelines will be nearly 3,500 kilometres (2,200 mi) long. [18] The total cost of these projects is estimated $45 billion.

There are other projects which fall under the SGC:

The project's current reserves are approximately 1.2 trillion cubic meters of gas and 2.2 billion barrels of condensate. [19]

Financing

European Investment Bank

On 6 February 2018, The European Investment Bank (EIB) voted to hand out EUR 1.5 Billion, one of Europe's largest ever loans, to one of the EU's largest fossil fuel projects, the Trans Adriatic Pipeline. The loan approval followed the release of a study demonstrating that the Southern Gas Corridor could be as emissions-intensive or even more so than coal power.

A document obtained via a freedom of information request revealed that the European Commissioner for Energy and Climate Action and the Vice President of the European Commission in charge of the Energy Union had been lobbying the EIB to green-light loans to TAP and the eastern section of the Southern Gas Corridor, the Trans Anatolian Pipeline. [20]

Involvement of other financial institutions and stakeholders

The European Bank for Reconstruction and Development (EBRD) already approved three loans for the Shah Deniz stage 2 gas field (US$200 million, US$250 million and US$100 million) as well as a US$500 million loan for TANAP, and stated its financial support to TAP could amount to EUR 1.2 billion. On top of US$250 million for Shah Deniz stage II (as part of a package with the EBRD and commercial banks), the Asian Development Bank (ADB) approved in December 2016 an additional US$1 billion for the Shah Deniz II gas field. The World Bank approved two US$400 million loans for Turkey and Azerbaijan for TANAP. The World Bank's Multilateral Investment Guarantee Agency (MIGA) approved a guarantee of up to US$950 million for TANAP against the risk of non-honoring of a sovereign financial obligation. The Asian Infrastructure Investment Bank (AIIB) approved a US$600 million loan for TANAP at an unannounced extraordinary virtual Board meeting on 21 December. (The AIIB's project summary also states the combined EIB and EBRD support for TANAP as US$2.1 billion, which suggests that, like the EIB, the EBRD is considering EUR 1 billion for TANAP.) [21]

Currently,[ when? ] the Azerbaijani government (Ministry of Economy of the Republic of Azerbaijan) owns 51% of the Southern Gas Corridor; the other 49% is owned by State Oil Company of Azerbaijan Republic (SOCAR). [22]

As of 2017, The World Bank supplied a $400 million loan to BP, a major shareholder and operator of Shah Deniz JV. The Asian Development Bank has stated its planned financing of $600 million towards TANAP. [23]

As of 2017, the European Investment Bank (EIB) was considering a 2 million euro contribution towards the TAP. [24]

Controversies

Gas demand

Between 2010 and 2015, gas demand in the European Union has decreased more than 20%. [25] At the same time, gas projects are evaluated with a more than 70% higher gas demand scenario in 2030. [26] By 2021 gas consumption only returned to about 2010 levels. [27]

The EU has an overall surplus of gas import infrastructure and many of import capacities are underutilized. [28] On the other hand, the EU goals for energy efficiency would reduce gas demand in the next years. The EU has set itself a 20% energy savings target by 2020 when compared to the projected use of energy in 2020. [29]

European Climate Policy

The key targets of the EU on climate policy by 2030 are at least 40% cut in greenhouse gas emissions compared with 1990, 27% of total energy consumption from renewable energy and 27% increase in energy efficiency. [30] According to the International Energy Agency, "no more than one-third of proven reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2 °C goal". [31] The European Investment Bank has stated its commitment to control climate change, yet is still aiming to finance the corridor.

Diversification

With the SGC, one of the goals on the EU is to diversify natural gas supply routes and reduce dependency from Russia. [1] Russia supplied about one third of the EU gas consumption in 2013, mainly through Gazprom. [32] However, the European Bank for Reconstruction and Development (EBRD) is to lend US$200 million to Lukoil to develop the Shah Deniz gas field in Azerbaijan. The Russian company Lukoil, whose CEO is an Azerbaijani businessman Vagit Alekperov, owns 10% of the field. [33]

Supporting the Azerbaijani government

Building SGC, European countries and companies support gas export from Azerbaijan and contribute to finance Azerbaijan's government. Many critics, watchdog groups and Non-governmental organizations (NGOs) have criticized the Azerbaijani government as repressive or authoritarian, and also assert activists and journalists are regularly arrested on false charges and imprisoned. The International Federation for Human Rights (FIDH) wrote in 2015, that "for more than a decade Azerbaijan has made shameless use of caviar diplomacy to charm European governments, its most important oil and gas clients". [34] The CEE BankWatch warns that "Developing Shah Deniz stage 2 and the Southern Gas Corridor is likely to cement further the oppressive structures of the Aliyev government". [3]

According to the reports prepared by European Strategic Intelligence and Security Center (ESISC) on March and April 2017, the publication of such information serves to create a climate against some countries including Azerbaijan to benefit Armenia which is led by different NGO's and its connections within the Council of Europe. In these reports, such activities of that Armenian connection are regarded as unilateral and biased hiding private interests of the network behind the purview of the defense of human rights, [35] [36] but the activity of the ESISC itself is characterized as a part of the Azerbaijani propaganda (see European strategic intelligence and security center).

Over ten European media organizations have jointly investigated the Azerbaijani government, and have accused officials of laundering money to the United Kingdom. Dubbed the "Azerbaijani Laundromat", this scheme allegedly consisted of sending 2.5 billion euros to European politician and Azerbaijani elites; the money was also used to purchase luxury goods. [37] One of the reasons why the laundering took place was because the Azerbaijani government needed to keep a positive image in Europe to gain support for the Southern Gas Corridor. The corridor is a main reason for the laundering and can explain the government's heavy lobbying at the European level. [38] As a result of the scandal, more than 80 human right activists and opposing politicians were arrested and jailed in Azerbaijan.

Outside opinion and protests

The Southern Gas Corridor received mixed reactions from the public, and has been the target of many protests and petitions around the world. In Italy, there have been protests concerning the corridor and its damage to the environment. In March 2017, environmentalists protested against the removal of historical olive groves; this centuries-old grove was blocking the path of the TAP. Protesters blocked the construction site to prevent trucks and supplies from entering. Police involvement was involved, and broke up 300 protesters. [39] More than 60 olive trees have already been removed since the protest, to the locals' dismay.[ citation needed ]

More than 25 NGOs have also written a letter to the EIB Board of Directors and the bank's president, asking for the European Investment Bank to stop funding the TANAP due to the human rights violations the project has caused. The letter states that the Azerbaijani government has used forms of torture, imprisonment, and disruption to protesters, journalists, and other politicians; human rights monitors have also not been able to enter Azerbaijan. [40]

Related Research Articles

<span class="mw-page-title-main">European Bank for Reconstruction and Development</span> Financial institution which supports more than 30 countries

The European Bank for Reconstruction and Development is an international financial institution founded in 1991. As a multilateral developmental investment bank, the EBRD uses investment as a tool to build market economies.

The State Oil Company of the Republic of Azerbaijan, largely known by its abbreviation SOCAR, is a fully state-owned national oil and gas company headquartered in Baku, Azerbaijan. The company produces oil and natural gas from onshore and offshore fields in the Azerbaijani segment of the Caspian Sea. It operates the country's only oil refinery, one gas processing plant and runs several oil and gas export pipelines throughout the country. It owns fuel filling station networks under the SOCAR brand in Azerbaijan, Turkey, Georgia, Ukraine, Romania, Switzerland, and Austria.

<span class="mw-page-title-main">Nabucco pipeline</span> Proposed natural gas pipeline from the Turkish-Bulgarian border to Austria

The Nabucco pipeline was a failed natural gas pipeline project from Erzurum, Turkey to Baumgarten an der March, Austria to diversify natural gas suppliers and delivery routes for Europe. The pipeline was to lessen European dependence on Russian energy. The project was backed by several European Union states and the United States and was seen as rival to the Gazprom-Eni South Stream pipeline project. The main supplier was to be Iraq with potential supplies from Azerbaijan, Turkmenistan, and Egypt.

<span class="mw-page-title-main">Shah Deniz gas field</span> Azerbaijani natural gas field

Shah Deniz gas field is the largest natural gas field in Azerbaijan. It is situated in the South Caspian Sea, off the coast of Azerbaijan, approximately 70 kilometres (43 mi) southeast of Baku, at a depth of 600 metres (2,000 ft). The field covers approximately 860 square kilometres (330 sq mi). Stretching out over 140 square kilometres, the reservoir is similar in size and shape to Manhattan Island.

<span class="mw-page-title-main">South Caucasus Pipeline</span>

The South Caucasus Pipeline is a natural gas pipeline from the Shah Deniz gas field in the Azerbaijan sector of the Caspian Sea to Turkey. It runs parallel to the Baku–Tbilisi–Ceyhan pipeline (oil).

<span class="mw-page-title-main">Trans-Caspian Gas Pipeline</span> Proposed subsea pipeline

The Trans-Caspian Gas Pipeline is a proposed subsea pipeline between Türkmenbaşy in Turkmenistan, and Baku in Azerbaijan. According to some proposals it would also include a connection between the Tengiz Field in Kazakhstan, the Sangachal Terminal in Baku, and Türkmenbaşy. The Trans-Caspian Gas Pipeline project would transport natural gas from Turkmenistan and Kazakhstan to European Union member countries, circumventing both Russia and Iran. It would do this by feeding the Southern Gas Corridor. This project attracts significant interest since it would connect vast Turkmen gas resources to major consumers Turkey and Europe.

<span class="mw-page-title-main">Azerbaijan–Turkey relations</span> Bilateral relations

Relations have always been strong between Azerbaijan and Turkey, the only two predominantly Turkic countries located west of the Caspian Sea. Former Azerbaijani president Heydar Aliyev often described the two as being "one nation, two states."

<span class="mw-page-title-main">Trans Adriatic Pipeline</span> Greece to Italy gas pipeline

The Trans Adriatic Pipeline is a natural gas pipeline operational since 2020, running from Greece through Albania and the Adriatic Sea to Italy. It is the final section of the Southern Gas Corridor originating in Azerbaijan. As of 2022, capacity is 10 bcm per year.

<span class="mw-page-title-main">Azerbaijan–European Union relations</span> Bilateral relations

The Republic of Azerbaijan and the European Union (EU) have maintained a positive relationship through the years and have become more closely linked since 1991. Azerbaijan is currently part of the European Neighborhood Policy, the Eastern Partnership and the Council of Europe. The EU is the largest foreign grant donor to and investor in Azerbaijan, both in the government sector and civil society, making available over 600 million EURO of bilateral EU assistance since 1992.

Two-thirds of energy in Azerbaijan comes from fossil gas and almost a third from oil. Azerbaijan is a major producer of oil and gas, much of which is exported. Most electricity is generated by gas-fired power plants. Energy is all types of energy products, including fuel, renewable energy, water energy, electrical and heat energy.

The Azerbaijan–Georgia–Romania Interconnector (AGRI) is a proposed project to transport Azerbaijani natural gas to Romania and further to Central Europe. Natural gas would be transported by the pipeline from Sangachal Terminal in Azerbaijan to the Kulevi Terminal at the Black Sea coast of Georgia. In Kulevi, the liquefied natural gas export terminal would be built. Liquefied natural gas will be transported by LNG tankers to the Constanța terminal in Romania. After regasification natural gas will be delivered through the existing gas grid to Romania and other European countries. Alternative to the transportation of liquefied natural gas is transportation of compressed natural gas.

The South East Europe Pipeline was a proposal for a natural gas pipeline from eastern Turkey to Baumgarten an der March in Austria. It was seen as an option for diversification of natural gas potential delivery routes for Europe from Azerbaijan. The pipeline would allow Azerbaijan to supply Europe with 10 billion cubic metres of natural gas a year. The main source of the gas would be Shah Deniz gas field when its second stage comes online.

<span class="mw-page-title-main">Trans-Anatolian gas pipeline</span> Turkish natural gas pipeline

The Trans-Anatolian Natural Gas Pipeline is a natural gas pipeline in Turkey. It is the central part of the Southern Gas Corridor, which connects the giant Shah Deniz gas field in Azerbaijan to Europe through the South Caucasus Pipeline and the Trans Adriatic Pipeline. The pipeline has a strategic importance for both Azerbaijan and Turkey. It allows the first Azerbaijani gas exports to Europe, beyond Turkey. It also strengthens the role of Turkey as a regional energy hub.

The Ionian Adriatic Pipeline (IAP) is a proposed natural gas pipeline in Southeast Europe. It would run from Fier in Albania through Montenegro, and Bosnia and Herzegovina, to Split in Croatia.

Gas flows from Turkey to Greece through a pipeline which is almost 300 km long. It is an incomplete transportation project that was proposed in the framework of the Southern Gas Corridor. It was proposed for the transportation of natural gas from Azerbaijan's Shah Deniz gas field Phase II to markets in Europe via Greece and Italy. The Turkey–Greece pipeline was completed in 2007 while the Greece–Italy pipeline was not built, due to the competing Trans Adriatic Pipeline.

The overall investment climate in Azerbaijan continues to grow despite significant challenges remain. Over the recent years, the country has made efforts to integrate more fully into the global marketplace and attract foreign investment.

CEE Bankwatch Network is a global network which operates in central and eastern Europe. There are 17 member groups, multiple non-governmental organizations based in different locations; the network is one of the largest networks of environmental NGOs in central and eastern Europe. Bankwatch's headquarters rest in Prague, Czech Republic.

<span class="mw-page-title-main">Pipelines in Azerbaijan</span>

Azerbaijan is one of the birthplaces of the oil industry and its history is linked to the fortunes of petroleum, with pipelines used from the late 19th century. The total length of the main pipeline in Azerbaijan is 4,600 kilometres (2,900 mi)

<span class="mw-page-title-main">Gas in Turkey</span> Production, transport and consumption of gases such as methane in Turkey

Fossil gas supplies over a quarter of Turkey's energy. The country consumes 50 to 60 billion cubic metres of this natural gas each year, nearly all of which is imported. A large gas field in the Black Sea however started production in 2023.

References

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  21. ↑ "Southern Gas Corridor" . Retrieved 7 March 2018. CC BY-SA icon.svg Material was copied from this source, which is available under a Creative Commons Attribution-ShareAlike 3.0 Unported license.
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  39. ↑ "Italian police disrupt protest to prevent olive grove removal". Reuters. 28 March 2017. Retrieved 4 October 2017.
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