Caspian Report - Issue: 07 - Spring 2014

Aura Sabadus
34
Russian-backed rival South Stream
could challenge the project, as Moscow
seeks alternative transit routes.
Other challenges may come from
potentially new Iranian pipeline or
US LNG exports to European markets
that could enter in direct competition
and raise questions over the
The partners in the Shah Deniz consortium have
hinted at the possibility of expanding further
into Western Europe by offering to supply
Switzerland and France.
ability of the SGC to deliver on any of
those three key points.
Physically deliverable
The economics of the Southern Gas
Corridor - equally supported by the
EU and Azerbaijan, the country that
will supply the gas - are eye-catching:
a $45 billion project, transporting
16 billion cubic metres of gas per
year, including six to Turkey, along
the shortest route from the Caspian
Sea to Italy and providing energy
to seven million European homes
when the second phase of the offshore
Shah Deniz platform comes on
stream in 2018/19. 2
Some countries along the route may
see their biggest ever investments as
a result – Georgia, for instance. According
to a conference report by the
Jamestown Foundation last year, 3
the expansion of the existing South
Caucasus Pipeline (SCP), the first
leg of the corridor - currently used
to ship gas from the Caspian Sea to
Turkey - will bring investments of up
to $2.2 billion to Georgia as a transit
country.
At Erzurum in north-eastern Turkey,
the SCP will connect with the newly
built Trans Anatolian Natural Gas
Pipeline (TANAP), which will travel
westward to Turkey’s Greek border
and bring some $8 billion in direct
investments to the Turkish economy.
From there, the volumes will head
further west along the Trans Adriatic
Pipeline (TAP) and offer added
benefits to countries along the route.
Greece will see cash inflows of $2.04
billion and the creation of 2,000
direct and 10,000 indirect jobs. In
Albania, TAP will be its largest investment,
allowing it to diversify its
sources of energy, while in Italy TAP
will contribute to the creation of permanent
jobs and cover up to 12% of
the country’s supplies. 4
The partners in the Shah Deniz
consortium have hinted at the possibility
of expanding further into
Western Europe by offering to supply
Switzerland and France. TAP
will also help Greece to lower its
dependence on Russian gas, having
already reduced it from 84.2%
in 2000 to 52.8% in 2010 thanks to
LNG imports. 5 Similarly, Italy has re-
2.
“The Southern Gas Corridor,” (July 2013), Holman Fenwick Willan, London
3.
“Azerbaijan and the Southern Gas Corridor; Implications for US and European Energy Security,” (13
September 2013), The Jamestown Foundation.
4.
Ibid.
5.
Vatansever, A., Koranyi, D., (December 2013) “Lowering the Price of Russian Gas: A Challenge for
European Energy Security,” Atlantic Council Issue Brief