Southern Corridor Moves Ahead Without Turkmenistan, Though It May Catch Up Later

Experts at recent conferences in Washington, DC at the Woodrow Wilson International Center for Scholars, Jamestown Foundation and Elliott School of International Affairs focused on the prospects for the Eurasian region following withdrawal of US troops from Afghanistan in 2014 and the decision of the Shah Deniz II consortium to go with the Trans-Adriatic Pipeline (TAP). They provided a post-mortem for the failed Nabucco project and barely mentioned the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline in which some hopes for post-war recovery have been invested.

At a conference panel organized by the Jamestown Foundation on Azerbaijan and the Southern Gas Corridor to Europe: Implications for U.S. and European Energy Security,

Deputy Assistant Secretary of State for Energy Amos J. Hochstein declared the Shah Deniz decision in June a “victory for US foreign policy” in supporting the EU, but said it “wasn’t a silver bullet” for energy diversification because it represented only 10 billion cubic meters against the current demand of 500 bcm. Even so, he believed the future of the Southern Corridor was not about multibillion pipelines anymore, but about unconventional gas, renewables, and LNG. Reiterating points made previously at the Wilson Center, Hochstein said that only decisions based on solid economics were viable.

"If we can start looking at the region and the subregions in an interconnection model of what do we need to do in different key places, that will allow both LNG and nuclear and renewables all to fit in with each other,” he said. “And not [with] every country that has a coastline saying ‘I need an LNG terminal' -- but where is the most important place to have it, and where it fits in to other interconnectors and spurs that will then be able to take the gas that's coming into the Southern Corridor, the gas that's coming in from other sources, from Russia, from Norway under existing infrastructure, with new LNG terminals, with nuclear…so that it makes sense to get real diversification on energy security in Europe,” he elaborated.

At the Wilson Center, Greg Saunders, the Senior Director of Government Affairs for BP, projected demand for energy -- mostly natural gas -- will  increase by 40% by 2030, 90% of which will be needed in the non-OECD countries, such as India and China. He projected the Southern Corridor to cost $45 billion and to supply Europe and Turkey with a combined 16 billion cubic meters annually.

“Azerbaijan is the best option to deliver gas to the European markets,” because Azerbaijan "is not a direct rival of Russia in the European market," said Alexandros Petersen, an advisor to the European Energy Security Initiative (EESI) at the Wilson Center.

Speaking at Jamestown Foundation, Christian Burgsmuller, Counselor Head of the Energy, Transport and Environment Section Delegation of the EU to the US, emphasized the EU's policy of diversification in support for the Southern Corridor and the determination to move Europe to a low-carbon economy and increase renewables in the energy mix. Yet even with a long-term objective of 45% renewables, natural gas would still remain a major part of that mix and Russia would not be bypassed.

"Russia will remain a major part of the European natural gas equation," he said, quoting European Energy Commissioner Gunther Oettinger, "but we are interested in not putting all our eggs in one basket.” The 10 bcm currently destined to Europe from Shah Deniz might quickly become 20-25 bcm within 5 years, he added.

Amb. Matthew Bryza, director of the International Centre for Defense Studies in Tallinn, said the TAP decision gave Azerbaijan the "oxygen of independence" – but that the bad news for Russia’s Gazprom begins with the South Caucasus TANAP across Turkey and then TAP.

While many lamented the demise of the more ambitious Nabucco pipeline and its replacement with the more modest TAP, Bryza cautioned: "But it wasn't ever going to be Nabucco because of the way Nabucco had structured the project. There simply isn't enough gas available at this time to fill Nabucco,”  i.e. 31 bcm.

"It's a shame, it's maybe a setback or a loss that the EU and US were unable to attract Turkmen gas which would have enabled the Nabucco pipeline to be financed but...that simply isn't going to happen until Turkmenistan knows there's a Southern Corridor in place,” he said. Bryza asked why the Turkmen leader would subject himself to Moscow’s pressure for defying Russia in order to send Turkmen gas west to Europe, if he did not know how the gas would physically reach a European market. Perhaps there is a chance to return to the prospects of 30-40 bcm, but it was unreasonable to expect this now.

 “Hopefully, Turkmenistan is going to decide, once the Southern Corridor is in place, that it’s ready to export gas westward,” concluded Bryza.

Catherine A. Fitzpatrick