Caspian Report - Issue: 07 - Spring 2014
Aura Sabadus 44 The Southern Gas Corridor provides balanced state and private participation, which can guarantee greater stability and reduce risks. However, it is important to note that Turkey’s current representation in the project is exclusively through its state companies – the transmission system operator BOTAS and its oil and gas incumbent TPAO may enhance the political vulnerability of the SGC. Sensitive topics such as Turkey’s and Azerbaijan’s stance towards Armenia could place Ankara and Baku in a difficult relation to one another and enhance the potential for political spill-over into the energy sector. Since Turkey will be a crucial link in the Southern Gas Corridor, as well as an important recipient of its gas, neither Turkey itself nor the partners involved in the project can afford to incur political risks. For that reason, the Turkish government ought to be encouraged to take a back seat, allowing the private sector to establish itself as a buffer against the consequences of possible disputes emerging at state level. Admittedly, the Turkish government hinted in February at the possibility of putting up part of its 20% stake in TANAP for privatisation, but since then there have been no further developments. Compared to other regional projects, notably Russia’s supply of gas through existing and upcoming infrastructure such as South Stream, the Southern Gas Corridor offers not only lower political risks thanks to the participation of public and private companies, but also establishes itself as a much-needed link between east and west. This connection will, on the one hand, allow Azerbaijan and possibly other gas-rich Caspian countries such as Kazakhstan or Turkmenistan as well as Middle Eastern or Levantine producers to gain a foothold in Turkey and the EU, and on the other open up exceptional trading opportunities deep into Eurasia for Turkey and Europe. Conclusion The Southern Gas Corridor is being hailed as the successful outcome of Europe’s diversification quest along its south eastern flank. It offers the prospect of cheaper prices than those asked by Russia and is less politically vulnerable thanks to a balanced participation of public and private companies. However, the emergence of the Moscow-backed South Stream following political tensions between Russia and its neighbouring transit country, Ukraine, could raise serious uncertainties for regional gas supply ventures. In its current format – a 16 bcm/year project – the Southern Gas Corridor will find it difficult to rival the 63 bcm/year South Stream both in terms of market share and pricing. While Russia can afford to hand out price discounts to loyal political clients, the Southern Gas Corridor does not enjoy that luxury. In this context, the only way for the Southern Gas Corridor to beat off competition is to offer everything that Russia cannot: a more flexible infrastructure that reaches out not only to Southern Europe but also
anches off into the central and eastern part of the continent, prices that reflect supply and demand rather than political diktats and greater confidence in the private sector as the main driver of the project. For that reason, any new volumes that will be offered through the Southern Gas Corridor to Turkey and the EU from the Caspian region, the Middle East or the Levant under those terms will not only offer more competitive terms, but also represent a genuine contribution to Europe’s ambitions for diversification and market integration. 45 CASPIAN REPORT, SPRING 2014
- Page 1: caspian published by caspıan strat
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- Page 24 and 25: Matteo Verda 22 CONTRIBUTION OF Tra
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- Page 30 and 31: Matteo Verda 28 Azerbaijani gas wil
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- Page 48 and 49: Davide Tabarelli 46 Environmental e
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anches off into the central and<br />
eastern part of the continent, prices<br />
that reflect supply and demand<br />
rather than political diktats and<br />
greater confidence in the private sector<br />
as the main driver of the project.<br />
For that reason, any new volumes<br />
that will be offered through the<br />
Southern Gas Corridor to Turkey<br />
and the EU from the <strong>Caspian</strong> region,<br />
the Middle East or the Levant under<br />
those terms will not only offer more<br />
competitive terms, but also represent<br />
a genuine contribution to Europe’s<br />
ambitions for diversification<br />
and market integration.<br />
45<br />
CASPIAN REPORT, SPRING <strong>2014</strong>
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