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TheRoleoftheSouthernGasCorridorinStrengthening EnergyCooperationtoIncreaseEnergySecurityofEurope
Bratislava,28th ofMay2018
Gülmira Rzayeva Research Associate Oxford Institute for Energy Studies Founding Director, Eurasia Analytics
TheSGCmovingahead Ŷ TheSGCsecuresreliableenergysuppliestothemostneededandenergydependentregionof Europe. Ŷ TheSGCwillhaveitsinputinsustainabilityofenergyconsumptioninEuropewithproviding additionalvolumesofgascomingfromalternativesources. Ŷ ConstructionstageofSCPx &TANAPfinalized;TAP85%iscompletedmakingSGC themostadvancednewproject. Ŷ EUincludedSGCas1ofits4prioritygascorridors,thusrecognizingitasanimportant componenttoachieveits2020strategy&providenewsourcesofgas.
Ŷ SD2gaspriceiscompetitive.GSPAwassignedfor25yr with9Europeangasbuyersandfor15 yr withBotas Ͳ10+bcm EUACQ+6bcm toTUR.LTCscreatesmorepredictablemarginsforthe sales.
Source: IHS Energy 1
1 Equity Ownership across the Southern Gas Corridor
SCPC Pipeline Owners’ AGSC Shareholders’ Key Shah Deniz Production Sharing TANAP Shareholders’ Agreement TAP Shareholders’ Agreement Agreement Agreement Agreement: Agreement (PSA)
IJV: Incorporated Joint Venture UJV: Unincorporated Joint Venture
The SGC can significantly affect the gas markets in Italy, Greece and Bulgaria Ŷ Italy: 27% of Gazprom exported volume (29.6 bcm in 2018). Ŷ Greece: 34% of Gazprom imported volumes (2.93 bcm in 2018; LTC expires in 2026). Ŷ Bulgaria: 30% of imported volumes (2.9 bcm in 2018, LTC with Gazprom expires in 2022).
5 GREECE gas demand and import ITALY gas demand and import Azerbaijan 4 100 Turkey Qatar 90 3 Norway Azerbaijan 80 2 Nigeria Norway 70 1 Egypt Netherlands 60 Algeria Unitedkingdom0 50 Russia Qatar 40 LIBYA BULGARIA gas demand and import 30 ALGERIA 4 3.5 20 RUSSIA 3 consumption 10 2.5
0 2 2005 2006 2007 2008 2009 2010 2011 Azerbaijan 20052006200720082009201020112012201320142015201620182020 1.5 Russia 1 consumption 0.5 0 2 Source: Author , Cedigaz, Snam Rete
2 AZEdomesticmarket
MCM
60000 ShafagͲAsiman
50000 AbsheronStage2 AbsheronStage1 40000 ACGassociated
30000 SD1&2 Babek 20000 Garabagh
10000 Bahar PalchiqPipillesi 0 Umid
45000 25 AZEgasdemandprojection,BCM 40000 35000 20 30000 production
15 25000 Exportand low consumption(low) 20000 base 10 Exportand high 15000 consumption(base) Exportand 5 10000 consumption(high) 5000
0 0 201720192021202320252027202920312033203520372039
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 3
The EU market: gas from new sources is needed to substitute demand growth, production loss and phased out LTCs Gasdemandrecoveredabove2011leveldue to:a)increasedshareofgasinpower generation;b)gastocoalswitchinelectricity production;andc)Economicgrowthin leadingEuropeangasmarkets. Accordingtoconsensusforecast,additional importsoftheEUwillamountto77bcmin 2030and88bcm in2040. Decliningdomesticproductionandfailureof “LNGwave”tomaterialise ontightAsian demandleavessupplyshortfall.
Source: Gazprom Export 6
3 Conclusion
Energy security has the price…The EU also has to pay with strong political support of the project and solving landfall issues in Italy to receive the gas in a timely manner.
“We are creating a new and serious partnership in the Eurasian region. It is both political and economic effect will be enormous.” “SGC is not only a pipeline, it is a serious political initiative”, President Ilham Aliyev
THANK YOU!
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