Caspian Report - Issue: 07 - Spring 2014

states, potentially capturing market
share targeted by SGC. Similarly,
SGC hopes to reach out to Bulgaria
through the Interconnector Greece-
Bulgaria (IGB), which will have a capacity
of one billion cubic metres per
year and is expected to be financed
and built by TAP. However, it will
come up against competition from
South Stream, which also targets the
Bulgarian market.
In sum, the question that emerges
is: to what extent can the Southern
Gas Corridor ensure the competitive
delivery of gas in the long-term
in a manner that fulfils Europe’s diversification
goals in its vulnerable
south eastern region The answer is
straightforward – by offering everything
that Russia will not.
In its current form, the Southern Gas
Corridor may not bring much added
value to that already touted by South
Stream. To a significant degree, both
the SGC through TAP and South
Stream will vie for the same European
markets, including the largest
along their routes - Italy.
On the other hand, TAP has already
been granted a 25-year exemption
from third party access (TPA), placing
its operators in control over midstream
assets and barring adjacent
countries from off-taking volumes.
Russia is seeking a similar exemption,
and at the time of writing the
Bulgarian parliament expects to
modify its domestic law to prevent
TPA to South Stream.
The EU, as the supporter of the SGC
and the stakeholders of the SGC itself,
should promote, finance and
the question that emerges is: to what extent
can the Southern Gas Corridor ensure the
competitive delivery of gas in the long-term in
a manner that fulfils Europe’s diversification
goals in its vulnerable south eastern region
develop small-scale interconnectors
among regional countries and
allow the free flow of any additional
volumes that would come on stream
once production is increased in
Azerbaijan. These interconnectors
should be linked either directly or
indirectly to TAP, allowing regional
countries access to Caspian gas. The
connecting lines, already identified
by the EU as projects of common interest
(PCI) should facilitate reverse
flows between Turkey and Bulgaria,
Bulgaria and Greece, Bulgaria and
Serbia, Bulgaria and Romania, Romania
and Hungary, Croatia and Slovenia,
Austria and Italy.
With such a network of small-scale
interconnectors, Caspian volumes
would reach deep not only in the
southern part of the continent, but
also into central and Eastern Europe,
ensuring greater security of supply
and the integration of regional markets.
They would also facilitate the
free access and use of underground
storage facilities across the region.
Crucially, the free flow of Caspian gas
through regional interconnectors
would challenge Russia’s control
over infrastructure and markets.
In conclusion, the only way for the
Southern Gas Corridor to be competitive
in the long run, and to ensure
that its ambitions for growth
are not thwarted by Russia or any
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CASPIAN REPORT, SPRING 2014