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    Azerbaijan Commits to Supply Gas to the EU

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Summary

Azerbaijan committed Thursday to supply natural gas to the European Union, the first written pledge paving the way for Europe's bid to tap the huge...

by: J. Verheyden

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Natural Gas & LNG News, Azerbaijan, , Nabucco/Nabucco West Pipeline, South Stream Pipeline, Trans-Adriatic Pipeline (TAP)

Azerbaijan Commits to Supply Gas to the EU

Azerbaijan committed Thursday to supply natural gas to the European Union, the first written pledge paving the way for Europe's bid to tap the huge Caspian energy reserves, as the bloc seeks to diversify its supply sources.

"Azerbaijan commits to supplying substantial volumes of gas over the long term to the European Union, while Europe provides access to its market for them," the European Commission said in statement, after European Commission President Jose Manuel Barroso and Azerbaijan's President Ilham Aliyev signed a joint declaration in Baku Thursday.

The accord bolsters energy ties between the EU and the Caspian region, positioning Europe to improve its energy diversification and avoid excessive dependence on Russian natural gas exports, which are virtually the only gas source for Eastern European countries.

Gas from Azerbaijan will be the first to flow to Europe from the region, opening up a supply route which the EU calls the Southern Gas Corridor. "Azerbaijan will provide sufficient gas to enable the creation of the Southern Corridor," the EU said.

At least three pipeline projects are seeking to transport that gas, and their sponsors are currently negotiating purchase agreements with the consortium that is developing a Caspian offshore field, from where the gas will flow starting in 2017.

Three pipeline consortiums, Nabucco, TAP and ITGI, are vying to build the infrastructure to carry gas from Azerbaijan's Shah Deniz II gas field to Europe. The Commission said Azerbaijan would decide in the months ahead which project to prioritize.

Shah Deniz II is expected to add roughly 16 billion cubic meters of annual production, 10bcm of which would be ready for export to the EU.

The Shah Deniz II consortium is set to pick a buyer for the gas in the first part of this year.  Nabucco says all six of its shareholders are in talks to secure gas and it aims to seal its first gas contracts by the middle of 2011.

"We look forward to a swift allocation process for the Shah Deniz II gas field," Barroso said.

Barroso and the EU's energy commissioner Guenther Oettinger will now travel from Azerbaijan to Turkmenistan to discuss political and energy issues there.

Source: Wire Services