Caspian Report - Issue: 07 - Spring 2014

European natural
gas network.
alisation process in target countries
and further afield and its ability to
remain competitive in the long run.
The regional and global energy scene
is in flux. New gas producers such as
Cyprus, (northern) Iraq and Israel
are expecting to establish themselves
as firm suppliers by the end of
the decade, bringing into the equation
more choice for Turkish and European
markets. In that sense, they
will be fulfilling the role that Azerbaijan
expects to undertake within
the Southern Gas Corridor.
These projects are still in their early
stages and have the added inconvenience
of being fraught with political
problems that will first have to be
resolved. Nevertheless, it is widely
discussed that up to 10 bcm/year
and another 7 to 8 bcm/year could
reach Turkey and possibly Europe
from northern Iraq and Israel, respectively,
by the end of the decade.
Analysts have told this author that
the price of northern Iraqi gas could
be one of the cheapest in Turkey and
Europe, while Israel’s may be close
to that charged by Azerbaijan.
Prospective buyers suggested in an
interview with the author that if Israel
opts to sell gas via pipeline to
Turkey, rather than as LNG, the price
for the volumes may contain an element
of hub indexation, possibly one
linked to the British NBP, bringing
much greater flexibility than a purely
oil-indexed value.
Another regional competitor could
be Iran if sanctions introduced in
response to its alleged nuclear programme
are lifted. Sitting on over
33 trillion cubic metres of gas, the
country has the potential to become
an energy superpower. However, its
infrastructure remains poor and
would require multi-billion dollars’
worth of investment to ramp up
production for internal and regional
needs.
As an emerging supplier in great
need of finance, Iran could consider
establishing itself as a competitive
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CASPIAN REPORT, SPRING 2014