67
The second phase of Shah Deniz is operated and developed by BP and SOCAR,
the consortium of which is working on expanding its gas market to Southern Europe,
along with Georgia and Turkey. Twenty five-year-long and $100 billion-worth sales
and purchase agreements are already made with nine European gas buyers. In addition, it is expected that up to 11 bcm/a of SD 2 gas will enter the Bulgarian, Greek,
and Italian markets by early 2020 (www.bridgingeurope.net 2017).
The Trans-Adriatic Pipeline, which will carry gas from Shah Deniz 2 to the
European market, will provide the companies that produce gas with many opportunities in shipping the gas to other neighboring countries. The Shah Deniz 2 natural
gas can be transported to North Italy through the Snam Rete Gas (i.e., ENI affiliated
company) system as well as to other countries by means of existing interconnectors
via the development of reverse flows. Furthermore, once it is commissioned, the SD
2 consortium has the potential to ship some amounts of gas to Balkan countries via
the Ionian Adriatic Pipeline since this is the sole region in Europe (i.e., excluding
Turkey) where demand for domestic and regional gas is expected to double by 2030
(www.bridgingeurope.net 2018).
With sufficient levels of oil and gas reserves, Azerbaijan can play an important
role in EU diversification policy. As claimed by Gulmira Rzayeva, the primary challenge against the Azerbaijan Energy Policy is based on the fact the region is highly
susceptible and vulnerable to the changes mentioned. External factors, such as the
political conflicts in Ukraine, the rapid decrease of oil price, which is already down
to about $60, and the change of major powers’ geopolitical interests in the area all
impact the natural gas market and its future development in Europe with respect to
particularly the balance between supply and demand, its price and pricing models.
The possible US LNG suppliers, the EUC policy to decrease the share of gas in the
energy combination (e.g., the rising role of renewable sources and measures taken
to increase efficiency; perceiving coal as short-term solution) play a role in these
changes. All these advancements and difficulties make the market full of uncertainties and rather tight for the gas-producing companies investing billions of dollars in
different sections of the chain worth billions of dollars in producing, transporting,
and marketing their gas. The primary difficulty encountered by Azerbaijan is making the correct decisions regarding its energy projects since it is these decisions that
will ensure the well-being of the nation for the following 30 years (www.bridgingeurope.net 2018).
Caspian region is one of EU’s oil supplier and in that regard, Azerbaijan is playing an important role as an energy supplier for the EU, at present Azerbaijan is supplying about 5% of the EU’s oil demand and at present is the only alternative for the
EU to reduce EU’s dependency on Russian Gas. In January 2011, both parties
signed a “Joint Declaration on the Southern Gas Corridor.” “The Southern Gas
Corridor is a strategic initiative to bring Caspian” (in first step gas form Shah Deniz
2, and in the second step may be from Turkmenistan), Central Asian, and Middle
Eastern (Iran, Iraq Kurdistan) natural gas resources to the European markets. The
southern gas corridor is the major diversification tool for the security of the EU
energy supply (www.europa.eu 2017).
Azerbaijan
The second phase of Shah Deniz is operated and developed by BP and SOCAR,
the consortium of which is working on expanding its gas market to Southern Europe,
along with Georgia and Turkey. Twenty five-year-long and $100 billion-worth sales
and purchase agreements are already made with nine European gas buyers. In addition, it is expected that up to 11 bcm/a of SD 2 gas will enter the Bulgarian, Greek,
and Italian markets by early 2020 (www.bridgingeurope.net 2017).
The Trans-Adriatic Pipeline, which will carry gas from Shah Deniz 2 to the
European market, will provide the companies that produce gas with many opportunities in shipping the gas to other neighboring countries. The Shah Deniz 2 natural
gas can be transported to North Italy through the Snam Rete Gas (i.e., ENI affiliated
company) system as well as to other countries by means of existing interconnectors
via the development of reverse flows. Furthermore, once it is commissioned, the SD
2 consortium has the potential to ship some amounts of gas to Balkan countries via
the Ionian Adriatic Pipeline since this is the sole region in Europe (i.e., excluding
Turkey) where demand for domestic and regional gas is expected to double by 2030
(www.bridgingeurope.net 2018).
With sufficient levels of oil and gas reserves, Azerbaijan can play an important
role in EU diversification policy. As claimed by Gulmira Rzayeva, the primary challenge against the Azerbaijan Energy Policy is based on the fact the region is highly
susceptible and vulnerable to the changes mentioned. External factors, such as the
political conflicts in Ukraine, the rapid decrease of oil price, which is already down
to about $60, and the change of major powers’ geopolitical interests in the area all
impact the natural gas market and its future development in Europe with respect to
particularly the balance between supply and demand, its price and pricing models.
The possible US LNG suppliers, the EUC policy to decrease the share of gas in the
energy combination (e.g., the rising role of renewable sources and measures taken
to increase efficiency; perceiving coal as short-term solution) play a role in these
changes. All these advancements and difficulties make the market full of uncertainties and rather tight for the gas-producing companies investing billions of dollars in
different sections of the chain worth billions of dollars in producing, transporting,
and marketing their gas. The primary difficulty encountered by Azerbaijan is making the correct decisions regarding its energy projects since it is these decisions that
will ensure the well-being of the nation for the following 30 years (www.bridgingeurope.net 2018).
Caspian region is one of EU’s oil supplier and in that regard, Azerbaijan is playing an important role as an energy supplier for the EU, at present Azerbaijan is supplying about 5% of the EU’s oil demand and at present is the only alternative for the
EU to reduce EU’s dependency on Russian Gas. In January 2011, both parties
signed a “Joint Declaration on the Southern Gas Corridor.” “The Southern Gas
Corridor is a strategic initiative to bring Caspian” (in first step gas form Shah Deniz
2, and in the second step may be from Turkmenistan), Central Asian, and Middle
Eastern (Iran, Iraq Kurdistan) natural gas resources to the European markets. The
southern gas corridor is the major diversification tool for the security of the EU
energy supply (www.europa.eu 2017).
Azerbaijan