Azernews.Az

By Gulgiz Dadashova

As Moscow is weathering the worst crisis since the 1998 defeault, it seems the plummeting oil price is only one among many other problems that the country is facing in 2015.

Russia can lose its position as the major gas supplier to Europe. It exports one third of the natural gas that Europe needs for heating its homes and running industries during the cold times.

Earlier this week, Russia announced that the natural gas supplied through Ukraine would be cut and diverted to another planned pipeline toward Turkey. It also said that Europe would have to extend its network to the Turkish-Greek border if it wants to continue purchasing the gas.

Russia plans to shift all its natural gas flows crossing Ukraine to a route via Turkey, a surprise move that the European Union’s energy chief said would hurt its reputation as a supplier.

The decision makes no economic sense, Maros Sefcovic, the European Commission’s Vice President for Energy Union, told reporters after talks with Russian government officials and the head of gas exporter, OAO Gazprom, in Moscow, Bloomberg reports.

The negotiation comes after Russian President Vladimir Putin announced in late 2014 that the South Stream Project, which was supposed to transfer gas via Bulgaria, would be dropped, noting that it would be replaced by Turkish Stream.

The pipeline was designed to supply 63 billion cubic meters of gas to Europe, which is already secured the Shah Deniz gas to be supplied with the Southern Gas Corridor. The Eastern European region, even if Turkey is included, doesn’t need the volumes Gazprom is planning for a new link.

However claims that Russia’s decision may leave behind the Southern Gas Corridor’s necessity turned to be groundless as analyzes that in the near future Azerbaijani gas will not have competitors in the European market, were confirmed by the competitors - Russian Gazprom.

Considering the projects on the table, Azerbaijan, large and reliable supplier of oil in the hydrocarbon rich Caspian region, has already left behind competitors launching the projects within the Southern Gas Corridor.

Construction of the Turkish stream will take longer than the Southern Gas Corridor, as the construction of the underwater part of the pipeline to be completed within three years, but it was preceded by a preparatory process and the long-term, research, preparation and approval of documents.

This in turn affects the deliveries of the Turkish Stream if it is built, as the supply can be expected after 2020, by which time the Azerbaijani gas will reach European markets.

Gazprom also pointed out that Moscow, which faced crisis due to the low oil prices and the imposed sanctions, is not going to build itself pipeline infrastructure in Europe, and is in talks with European countries.

However, the European countries also don’t seem longing to make investments in this projects, especially in light of the ongoing economic crisis and disappointment in the South Stream. Countries in Southern and Eastern Europe are not in the best position and lack money. It‘s enough to remind that Azerbaijan’s energy giant SOCAR purchased the gas distribution infrastructure in Greece and will also construct new infrastructure in Albania.

The question who will build a gas pipeline to Europe is still open, at a time when major energy companies are experiencing serious problems today because of falling oil prices.

This comes on the backstage of announcements that construction of the Southern Gas Corridor project runs in full amid interest of new real players, such as Turkmenistan. That is why, the question of Azerbaijani gas supplies is already solved and clearly Azerbaijan is beyond competition in the beginning of supplies to the European market. However, tough competition can be observed on the European market in the long term.

While the future possibility of investments in the Turkish Stream is still hazy, its political context is also enough complex as the 28-nation EU is planning an energy union to reduce dependence on Russia and facilitate transition to a low-carbon economy.

Back in October 2014, EU leaders endorsed actions to reduce the EU's energy dependence and increase its energy security for both electricity and gas over the energy security in the context of the Ukraine crisis.

They agreed to implement critical projects of common interest in the gas sector, such as the North-South corridor, the Southern Gas Corridor, and the promotion of a new gas hub in Southern Europe.

The creation of a new gas hub, which would render the TANAP project, part of the Southern Gas Corridor, pointless, would offer Russia an instrument that would enable it take control over gas transport via Turkey; and this could potentially be used to block other projects aimed at diversifying gas supplies to the EU.

The future energy game will involve new players like Iraq, Iran and the Caspian region states like Kazakhstan and Turkmenistan, Turkey should assure these countries that they can completely rely on it when transporting their reserves to European and global markets.

Meanwhile, Turkish President Recep Tayyip Erdogan and his Azerbaijani counterpart Ilham Aliyev stressed the strategic importance of Trans-Anatolian Pipeline Project, which is being constructed to transfer natural gas from Shah Deniz on the Caspian Sea to Europe via Turkey.

"TANAP grew into a global project and the necessary steps have been taken," Erdogan said Ankara on January 15. "The majority of companies to supply the pipes and carry out the construction work for the gas pipeline are Turkish companies."

President Aliyev also underscored the importance of the Southern Gas Corridor. "The Southern Gas Corridor and the development of the Shah-Deniz natural gas field is Europe's biggest infrastructure investment project and worth $45 billion," Aliyev said.

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