Southern Gas Corridor. Southern Gas Corridor - a drop in Gazprom's ocean

El Murid is itching to write five posts a day about how bad Russia is. We have to repeat ourselves. There are not many events that can be interpreted as Putin’s fault.
That is the failure of some kind of “northern strategy” of Putin, although if Afrin is given to Putin, then even this strategy invented by El-Murid will end in victory. The fact that Putin did not achieve the non-partition of Syria, any of the Syrian participants of the United States, Turkey, Iran, says that Syria will remain united. These are some gas corridors that Putin did not achieve. But Gazprom has already built almost 900 km of the Turkish Stream gas pipeline in total along two lines. And here is a new feature, or rather a bearded one from the time of Nabucco. El-Murid threatens the Southern Gas Corridor.

Oddly enough, Turkmenistan is in the most difficult situation. Hundreds and thousands of Turkmens are fleeing to Afghanistan, driven to complete despair by the despotic regime in their country. In Turkmenistan, contradictions are growing between the leading five tribal associations, and the situation of the population is completely intolerable. The army is unreliable to the point that soldiers are simply not issued weapons. On the Afghan side, in the province of Jowzjan, there is a concentration of ISIS militants, and to a large extent - Turkmens. In the event of “Drang Nah Turkmenistan” from Afghanistan, predicting the outcome of the attack is more than problematic: the militants may be greeted, if not with flowers, then certainly with joy

But there you can think about who to sell the future 180 billion m³ of gas per year. Nothing personal, just business. Then Russia will have to save this fraternal people. Well, this hard work will have to be paid for with Turkmen gas, if at least something remains intact. Moreover, there will be neither Turks nor Americans there. Unless Iranian proxies will help. All their own, so to speak)).
By the way, ISIS is a great tool for joining Northern Kazakhstan, and Russia’s seizure of oil fields in Kashagan and gas fields in Ilotan. And all this action is in our backyard, where no one can interfere. You can re-cut Central Asia into countries.

So, from the Central Asian countries Uzbekistan and Kazakhstan, they are exporting to China. Turkmenistan, if the war in Afghanistan continues, will go bankrupt. Not a single cubic meter will reach Europe. Azerbaijan's gas exports of 10 billion m³ are completely absorbed by Turkey and Iran. Moreover, he doesn’t even have enough to fulfill contracts on Iran. On November 22, 2017, Azerbaijan resumed purchases of natural gas from Russia.

Who will fill the $45 billion Southern Gas Corridor? That's right, Russia. Moreover, Russia does not need to build anything. Everything will be built by the EU

Following the third energy package of the European Union. Russia can fill at least half of the pipe))). There is no one else. Even if Iran exports through the SGC, it will only be able to fill half of the pipe under the third energy package. But it’s not just the United States that is against Iran, even the EU is against it, and despite allied interests, Russia is also against it.
No one can now fill the Southern Gas Corridor except Russia.

Moreover, apparently the EU is building this bypass route for Ukraine, in Russian purposes. Russian diplomacy. With the southern gas corridor, even 2 additional Turkish flow pipes are not needed. The Southern Gas Corridor initially joins the Russian gas system. Relations with Georgia damaged on 08.08.08 have already been restored Russian diplomacy.

Well, if, as part of the continuation of TANAP, the Trans-Adriatic Gas Pipeline is built, with the expansion of the SGC, then and only then will 2 more Turkish Stream pipes be needed. Because there is nothing and no one to fill out the TAP except Russia. Azerbaijan will not have enough gas even with the completion of the first stage of the Southern Gas Corridor; it is already buying gas from Russia

This is why the Turkish Stream for Turkey means that it itself voluntarily gives up its interests to Russia in Central Asia, reorienting the former republics of the Union exporting their gas to Europe towards it. Naturally, in light of even these two factors, the Turks view the Turkish Stream as an extremely annoying obstacle, although they are not averse to taking advantage of the bonus in the form of one of its pipes to their domestic market.

The most surprising thing is that none of the Vlasovites see that the European Union is building a network of gas pipelines with its own money in order to supply Russian gas there. There is no Turkish participation there. Harm to Russia can only be caused by Turkmenistan’s access to these pipes. But consistent Russian politics a reduction in gas exports from this country will most likely lead to a social explosion. Russia does not need another gas rival. Neither the United States nor Iran needs it. But there are no other players there. No one will allow the Trans-Caspian gas pipeline to be realized. Yes, and he is not needed. There is a gas pipeline around the Caspian Sea. It will be necessary to release the volumes if Turkmenistan is ours.

The formation of a Turkish-American military alliance in Syria creates good preconditions for the transportation of hydrocarbons through the occupied territories from the Arabian Peninsula to Turkey and further to Europe: “This makes the Turkish Stream gas pipeline almost unnecessary, in which the Russian Federation is interested and which has become one of the unspoken motives for the introduction Russian group to Syria"...

Again, twenty-five. The Vlasovites still can’t get the Qatari version of the gas pipeline through Syria out of their heads. At least look at the map. And they thought about how they would build a gas pipeline from the Arabian Peninsula to Turkey, bypassing the territories of Assad and Shiite Iraq. Through Shiite Iraq, Iran is blocking. Russia is blocking through Assad. At the same time, the Kurdish-American right bank of the Euphrates is blocking the Iranian version of the gas pipeline. In Dominoes, this is called a "fish". Where Russia wins.
Moreover, the essence of the gas pipeline, whether the Qatari version or the Iranian version, is not to stretch it through Turkey, so as not to become dependent on it. And through Syria to the ports Mediterranean Sea and liquefy it there. But all options are blocked.
It would be necessary to build a gas pipeline to Turkey, so Iran would run it across its territory, and Qatar would connect. He would not need any Syria. But geographic cretinism does not allow Vlasov’s dreamers to even think. The only one who is not afraid to depend on the Turks is the EU and Russia. They have gas flow alternatives.

Turkey is gradually turning into a gas hub: less than a month after the completion of the first line of the Turkish Stream for Russian gas, the first stage of another gas transport route, the Southern Gas Corridor (SGC), was launched. Azerbaijani gas will flow along it towards Turkey and then the EU.

The SGC itself will be an extensive network of gas pipelines, consisting of the expanded South Caucasus Gas Pipeline (Baku - Tbilisi - Erzurum), the Turkish TANAP (Trans Anatolian Gas Pipeline) pipeline and the European TAP (Trans Adriatic Gas Pipeline). The total length of all parts of the SGC will be 3,500 km from Baku to southern Italy through Georgia, Turkey, Greece, and Albania.

Gas from the Shah Deniz offshore field will be transported to Europe along this route. The cost of the project is estimated at more than $40 billion. It is assumed that at the first stage, the volume of Azerbaijani gas supplies via the new route will amount to 16 billion cubic meters per year, of which 10 billion cubic meters. m will fall in Europe, and will subsequently grow to 31 billion cubic meters.

Shah Deniz is one of the world's largest gas fields with gas reserves of more than 1 trillion cubic meters. The first stage of the project has already been launched; last year exports amounted to 7.3 billion cubic meters. In the coming days, it is planned to complete preparations for the start of production as part of the second stage. The operator of the project is the British BP (it owns 28.8%). Other participants are Petronas (15.5%), SOCAR (16.7%), TPAO (19%), NICO (10%) and Russian (10%). The cost of the second stage is almost $24 billion, and the estimated production volume is 16 billion cubic meters per year.

President of Azerbaijan Ilham, who was present at the launch site at the Sangachal terminal near Baku, noted that seven countries are now participating in the project - Azerbaijan, Georgia, Turkey, Greece, Bulgaria, Albania and Italy, and Bosnia and Herzegovina, Croatia and Montenegro are also planning to join it . During the ceremony, Aliyev fired the first gas. It will go to the Turkish TANAP (Trans Anatolian Natural Gas Pipeline) pipeline and then to the European TAP (Trans Adriatic Pipeline).

“Azerbaijani gas is a new source of gas supplies to Europe, and with the implementation of the SGC we are re-drawing the energy map of the continent,” Aliyev emphasized.

It is worth emphasizing that other parts of the SGC are not ready yet. TANAP is scheduled to be put into operation on June 12, the Turkish Minister of Energy and Natural Resources previously reported. And the Trans-Adriatic Pipe should be completed only by 2020.

The project was initially intended to increase the security of gas supplies to Europe, compete with the Russian pipeline projects “Turkish Project” and “Nord Stream 2” and reduce Gazprom’s share in the European market.

Experts believe that formally this project may increase competition in the European gas market, but it will not seriously displace Gazprom’s position in this area.

If we assume that competition implies a certain flexibility for the buyer and the ability to choose between suppliers, then such competition does not appear here or it is minimal, notes an analyst at the Energy Center of the Skolkovo Business School.

Gas from the Shah Deniz 2 project will be supplied under long-term contracts, it is known that the price also has an oil-linked component, that is, we are talking about mandatory (within the scope of “take-or-pay”) purchases, the expert explains . Thus, we are talking not so much about competition in the literal sense of the word, but about diversifying the source of supplies for the countries of Southern Europe (Greece, Bulgaria, Italy), he adds.

16 billion cubic meters is less than 3% of the European gas market, including Turkey, or 12 times less than Gazprom’s sales to Europe, the group’s director for natural resources and commodities Dmitry.

It's much more significant event for Italy, as well as Turkey and Bulgaria, which are heavily dependent on Russian gas, the project offers at least some kind of alternative, the analyst argues. It is no less significant for Azerbaijan, where until recently the main only commodity export product was oil: most likely, the role of gas in the global energy balance will grow, so exporting gas is a good way to slightly protect yourself from a possible drop in demand for oil, which is possible in over a long time horizon, adds Marinchenko.

Demand for Gazprom's gas may indeed decrease slightly, but Gazprom will still be able to manage volumes by offering discounts to buyers and making other concessions.

What Gazprom welcomed last decision, which obligated the company to essentially abandon the practice of market segmentation and price discrimination, suggests that the holding is willing to show some flexibility to protect its market share, he adds.

Last week, Gazprom and the Turkish government signed a protocol on the construction of the onshore section of the second line of the Turkish Stream.

In addition to it, an agreement was signed between Gazprom and the Turkish Botas, which defined the main conditions and parameters for the construction of this section of the pipe. It is assumed that the second line of the Turkish Stream (15.5 billion cubic meters per year) will ensure the transit of Russian gas through the Black Sea to the coast of Turkey and further to the border with.

On the same day, May 26, the head of Turkey announced that Turkish Botas had obtained from Gazprom a 10.25% discount on gas supplied in 2015-2016. and will receive a $1 billion retroactive payment as compensation.

Photo from website: president.gov.ua

Azerbaijani President Ilham Aliyev during negotiations with his Ukrainian colleague Petro Poroshenko invited Ukraine to take part in the Southern Gas Corridor (SGC) project.

“The President of Azerbaijan invited Ukraine to participate in the Southern Gas Corridor project,” notes a message published on the official website of the President of Ukraine.

The parties also paid attention to further deepening cooperation in the energy sector.

The official opening of the Southern Gas Corridor took place in Baku on May 29 this year. With its help, Azerbaijan plans to deliver gas to the EU bypassing Russia. “Blue fuel” will be transported along the corridor from the Shah Deniz field - through Turkey to southern countries European Union - Italy, Greece, etc. The cost of the project is more than 40 billion dollars. By 2020, it is planned to deliver about 10 billion cubic meters of gas to European countries. According to Aliyev, 7 countries are participating in the project: Azerbaijan, Turkey, Georgia, Greece, Italy, Albania and Bulgaria. Montenegro, Croatia, as well as Bosnia and Herzegovina plan to join it.

Some experts are confident that the Southern Gas Corridor cannot compete with the Turkish Stream, the second line of which will transport gas to European consumers.

Other analysts consider the launch of the SGC not very good good sign for Gazprom.

Thus, in the opinion of Nikolai Podlevskikh, head of the analytical department of Zerich Capital Management Investment Company, a positive aspect of the launch of the SGC can be considered that Turkey, by supplying gas to the southern EU countries, will get used to the role of a transit country, and in the future will ensure reliable gas delivery to the Turkish Stream "

The expert believes that the Southern Gas Corridor cannot satisfy Europe’s need for gas, even its southern states, so the Azerbaijani project will not become an alternative to the Turkish Stream.

Along with this, analysts believe that SGC is not very auspicious sign for Gazprom: the launch of the project shows that there is competition in the market, other gas pipelines can be built.

In this area, according to Raffeisenbank analyst Andrey Polishchuk, countries in the Middle East may compete with Gazprom in the future, however, given political factor and the instability of the region, the likelihood of the development of such projects is low.

At the same time, Gazprom has powerful advantages over its competitors - the scale of the Turkish Stream, its development potential, very large field reserves and its reputation.

“Unlike TANAP, Gazprom’s peak load can be much higher. Therefore, there are still no competitors yet,” the expert is sure.

Towards the development of a large gas field Shah Deniz Azerbaijan started in 2006. Two years later, against the backdrop of the gas conflict that arose between Russia and Ukraine, European Commission approved the Second Strategic Energy Review, which calls for expanding fuel supplies to Europe, bypassing Russia. In 2013, the route of the Southern Gas Corridor was finally approved. The project included: the already functioning Caucasus Pipeline and new ones - the Trans-Anatolian (TANAP) and the Trans-Adriatic (TAP). In 2015, the foundation of the TANAP gas pipeline was laid. The ceremony was attended by the presidents of Azerbaijan, Turkey and Georgia.

Azerbaijani President Ilham Aliyev emphasized the role of Western countries in supporting the Southern Gas Corridor. Photo from the official website of the President of Azerbaijan

What Gazprom's opponents have been talking about for so long has come true. Azerbaijan yesterday launched with fanfare a new gas pipeline, the Southern Gas Corridor (SGC), which alternative route will deliver gas first to Turkey and then to Southern Europe. Although the volumes of Azerbaijani gas supplies are significantly lower than Russian exports to Europe, observers were impressed by the coincidence in the timing of the commissioning of this project with the expected arrival of the Turkish Stream from Russia.

Already in the first half of June, the famous Trans-Anatolian Pipeline (TANAP) is expected to be put into operation, through which gas from the Azerbaijani Shah Deniz field will flow from east to west through the whole of Turkey to Europe. And yesterday, Azerbaijani President Ilham Aliyev at a terminal near Baku solemnly launched the first gas into the Southern Gas Corridor, of which TANAP will become a part.

Gas will be delivered to Europe via complex system communications with a total length of 3,500 km: the SGC includes the expansion of the Baku-Tbilisi-Erzurum gas pipeline, the construction of TANAP and the Trans-Adriatic Pipeline (TAP). Gas will flow from Azerbaijan to Georgia, Turkey, Greece, Bulgaria and Albania - and to Italy. It is expected that 6 billion cubic meters. m annually under this system will be received by Turkey, and 10 billion will go further for the Europeans.

Yesterday, Turkish President Recep Tayyip Erdogan sent an address on the occasion of the launch of the first stage of the Southern Gas Corridor project; he called the project an important example of regional cooperation. And Ilham Aliyev thanked the USA, Great Britain and the EU for their political and economic support for the project.

The joint declaration on the Southern Gas Corridor was signed by Azerbaijan and the European Commission in 2011, but it coincided that its launch will take place just weeks after the signing by Gazprom and the Turkish government of the protocol on the second - transit - line of the Turkish Stream, in which gas intended for the same southern region Europe (see).

Obviously, a comparison of the two projects suggests itself (initially, the creation of the SGC was very politicized and was considered as important object opposition to “Russian gas hegemony in Europe”).

Let us recall that the first line of the Turkish Stream under construction is intended for supplies to Turkey itself, but the second is intended for further pumping to the countries of Southern and South-Eastern Europe. The capacity of the Russian pipe is greater; each line can pump up to 15.7 billion cubic meters. m of gas per year. The SGC will bring only 10 billion annually to Europe.

But the “stream” is just being built, sales prospects have not yet been determined at all. For supplies along the Balkan route, it is necessary to build another pipeline, 100 km between Bulgaria and Serbia. But the head of TANAP, Saltuk Duzyol, reported that his organization already has contracts for gas transportation for 15 years in advance. The Southern Gas Corridor project has been approved by the European Union. It is actively supported Western countries. True, the SGC is also not entirely ready; the Trans Adriatic Gas Pipeline (TAP) is expected to be built by 2020.

For Gazprom's business, the creation of a competitor to Turkish Stream, of course, does not cause direct harm. In 2017, Europe received 193 billion cubic meters from the Russian Federation. m of gas, this is about 37% of the total volume. However, the symbolic significance of a competitive pipeline is great, especially if Kazakhstan and Turkmenistan later join in supplies through it.

The creation of the SGC requires huge investments. According to Natural Gas Europe, the total investment in the project is about $40 billion, including TANAP worth 9.3 billion, TAP - 6 billion, the second stage of the Shah Deniz development and the expansion of the South Caucasus gas pipeline - 23.8 billion .

The head of the analytical department of the company "Golden Hills - Kapital AM" Mikhail Krylov believes that, given the volume of investments in construction along the complex route of the "corridor", its participants are unlikely to offer European consumers Better conditions than Gazprom. “We can assume that by participating in the project “ Southern corridor", Türkiye is insuring itself against force majeure on the Turkish Stream. Europe has enough worries of its own, and it is unlikely that it will stimulate the construction of new lines of this corridor, creating real threat Gazprom’s share in supplies to the EU,” Krylov told NG. According to the expert, the implementation of the project, the preparation of which has been discussed for so long, has now become possible due to the increased demand for gas transit to the countries of the Mediterranean and Central and Eastern Europe.

“The Southern Gas Corridor project will not become a limiter for Gazprom’s supplies. On the contrary, under a certain scenario, the right in Italy will achieve the integration of the entire Mediterranean into a single economic organism, in whose blue veins Russian gas blood will flow.”

The head of the department of the Institute of Energy Research of the Russian Academy of Sciences, Vyacheslav Kulagin, does not agree that the “corridor” is a kind of insurance for Turkey in case the Russian flow is disrupted. “This is not so, because the decision on the SGC was made before the Turkish Stream,” says Kulagin. Kulagin does not see anything strange in the “coincidence” in the timing of the launch of the “flow” and the “corridor”. In his opinion, the launch of the “corridor” is carried out in accordance with the field development plan. And in Europe, the need is growing against the backdrop of a decline in its own production. The expert also does not think that the participants in the “corridor” will offer European consumers better conditions than Gazprom, which would eventually lead to Europe stimulating the construction of new lines of the SGC, creating a real threat to Gazprom’s share in supplies to Europe.

“The costs of the Southern Gas Corridor are higher than those of Gazprom. The construction of new branches depends on the availability and cost of gas, and unlike Gazprom, there are problems with this,” Kulagin told NG.

The Southern Gas Corridor will not be able to become a limiter for Gazprom’s export supplies, the expert believes. “This project was taken into account in the plans. Yes, it will partly compete with Russian gas, like other supplies. But this was all expected. The project will partially compensate for the decline in domestic production in Europe and the increase in demand in individual countries, but the niche for Russian gas remains large,” says Kulagin.

The Southern Gas Corridor, which will be an alternative to Russian gas supplies to Europe, will be partially launched next year. European experts, however, doubt the feasibility of the project both in terms of gas supplies and financial costs, which are half provided by EU banks.

The Trans-Anatolian Gas Pipeline (TANAP), which is the longest section of the Southern Gas Corridor, will be launched early next year. The general manager of the project stated this to the Turkish Daily Sabah Saltuk Duzyol. According to him, in June 2018, Turkey will begin to receive gas from Azerbaijan through the pipeline. A year later, in mid-2019, construction of the Trans-Adriatic Pipeline (TAP) to Greece and Italy will be completed and gas supplies to the EU will begin in March 2020.

"Southern Gas Corridor". Photo: tap-ag.com.

According to Saltuk Duzyol, the cost of TANAP was reduced to $7.9 billion and the 1,350-kilometer highway through Turkey has already been built by 93%.

“We are now awaiting approval of a $1.3 billion loan from the European Investment Bank,” said the general manager of TANAP. In total, the project attracts $3.95 billion in loans. The main lenders are European banks. The European Investment Bank is a state financial and credit institution European Union. From 2020, EU consumers should receive 10 billion cubic meters annually from Azerbaijan and Brussels actively supports the project, considering the Southern Gas Corridor an alternative to Russian gas supplies. Today, 10 billion cubic meters is 2.5% of gas consumption in the EU, and European experts are not sure that the project will really be able to reduce Europe’s dependence on Gazprom and is worth the money invested in it.

Lead Analyst at the Oxford Institute for Energy Studies Simon Pirani told Climate Home News that dreams of additional gas volumes through the pipeline are unlikely to come true.

“I have doubts about the significant volumes of additional gas that will be able to be supplied to the Southern Gas Corridor, because it is unclear from which field in the Caspian Sea they will come from,” said Simon Pirani. - There is a field being developed by the state-owned company SOCAR together with Total, but it will not be able to produce significant volumes of gas and both companies have already agreed to supply the produced gas to the domestic market. But there are no other fields for gas production for export. Therefore, the amount that Azerbaijan can give to Europe in reality is quite small.”

Europe hopes for diversified sources of supply through the gas pipeline, however, according to a leading analyst at the Oxford Institute, these hopes are unlikely to come true: “Turkmenistan is more interested in exporting to China, and in northwestern Iran there are not sufficient volumes of gas to supply to Europe.”

Another unpleasant news for the planned expansion of the Southern Gas Corridor may be reports that one of the largest LNG traders, Shell, is negotiating to purchase 5 billion cubic meters of gas annually from the Israeli Leviathan field for liquefaction in Egypt. Offshore fields in Israel, as is known, are also considered as an additional source of gas supplies to the Southern Gas Corridor. Instead of Israeli gas, there may be gas from Iraqi Kurdistan. However, we wrote that this project with the participation of Rosneft now has too many political risks.

Climate Home News noted that the cost of the Southern Gas Corridor (estimated at $45 billion) is comparable to all EU investments in the transition to clean energy in 2014-2020. In addition, the publication recalled the scandal of money laundering by Azerbaijan and bribery of European politicians. Thus, member of the board of the European Bank for Reconstruction and Development (EBRD) from Bulgaria Kalin Mitrev received $500 thousand from Baku, and the EBRD is a lender to the Southern Gas Corridor. Kalin Mitrev himself stated that he received money for consulting services.

Earlier, Deputy Chairman of the Board of Gazprom Alexander Medvedev said that Azerbaijan does not have enough gas, as it is forced to pump it back into the fields to support oil production. This is also why Gazprom and the state-owned company Socar were negotiating to increase Russian gas supplies to Azerbaijan. Now the Russian holding has a contract for the supply of up to 2 billion cubic meters of gas per year. Socar is interested in increasing the volume by another 3-5 billion.

Another indication that even with the planned supplies along the Southern Gas Corridor, not everything is so smooth, may be the statement of the head of the Turkish Foreign Ministry. Last year Mevlut Cavusoglu said that the first line of the Turkish Stream gas pipeline will supply 16 billion cubic meters annually, and the surplus - what is not in demand by Turkey - will go to TANAP.

“I believe that even 10 billion from Azerbaijan is not guaranteed to Europe in the foreseeable future,” says the deputy director of the National Energy Security Fund (NESF) Alexey Grivach. - The deep-water part of the Shah Deniz-2 field, which is planned as resource base for the Southern Corridor, a very difficult project in terms of technology, geology and climatic conditions. Therefore, Azerbaijan may be very interested in receiving insurance from Russia in order to avoid penalties for incomplete or untimely fulfillment of obligations.”

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