Caspian Report - Issue: 07 - Spring 2014

The Southern Gas Corridor has been
described as the successful outcome of the
EU’s quest to diversify supplies and wean
itself off Russian gas, a priority of its energy
security strategy.
The Southern Gas Corridor (SGC) – a
3,500 km route that in its first stage
will facilitate the transport of 10
bcm/year of Caspian gas to Southern
Europe by the end of the decade - has
been described as the successful outcome
of the EU’s quest to diversify
supplies and wean itself off Russian
gas, a priority of its energy security
strategy.
Nevertheless, such a description is
somewhat simplistic. Firstly, it gives
the false impression that energy
security can be achieved simply by
replacing one molecule of gas with
another of different geographical
origin, without emphasising that it is
the diversity of norms and practices
underpinning contractual agreements
between buyers and sellers
that offers greater choice, and implicitly
greater flexibility, rather than
merely swapping the products.
Secondly, diversity of supply is not
itself a guarantor of energy security,
as demonstrated by the case of the
US, which relies almost entirely on
nationally produced gas. In Europe,
where consumption is projected to
increase to 550 bcm/year in 2020
from 490 bcm/year in 2012, there
is admittedly a need for more gas
to plug the shortfall. In this context,
multiple sources of supply can
ensure greater security, providing
they are physically deliverable, commercially
attractive and politically
invulnerable. 1
This article proposes to assess the
viability of the SGC against these
three benchmarks, noting that despite
its rather limited dimensions
compared to Europe’s other sources
of supply – notably Russian and Norwegian
pipeline gas as well as the
potential for increased LNG imports
– the project could bring greater economic
efficiency throughout the
continent, help to integrate the EU’s
more vulnerable south eastern region
and establish itself as a link between
east and west.
The discussion will show that in
the light of recent political tensions
between Europe and Russia over
Ukraine, there is also a pessimistic
obverse to this scenario whereby the
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CASPIAN REPORT, SPRING 2014
1.
I am grateful to my colleagues Louise Boddy and Ben Wetherall for pointing these out.