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EUROPE LOOKS TO CASPIAN TO DIVERSIFY GAS SUPPLIES
By Stefan Wagstyl in London and Isabel Gorst in Moscow
FT
July 7 2006 03:00
A southern export route for Caspian gas to Europe was first mooted
after the 1991 collapse of the Soviet Union and the emergence of three
new energy-rich states - Azerbaijan, Kazakhstan and Turkmenistan. But
the idea has been given new life by recent increases in energy prices,
and European concerns about the security of Russian gas supplies.
Jeffrey Waterous, chairman of Global Union Energy Ventures, an
investment company, says: "Whether or not Gazprom will cut off supplies
again is not the point. What's important is that the perception of
risk that this might happen is high."
But the European Commission and other supporters of the proposal face
formidable political, financial and technical challenges. Significant
amounts of Caspian gas are not expected to reach the EU before about
2015 - and then only if gas prices remain high. Preliminary estimates
that the Caspian region holds about 9,000bn cubic metres of gas,
are dwarfed by the figures for Russia and Iran, which together own
about 68,000bn cubic metres, nearly half the global reserves.
Oil companies argue such estimates are conservative and there could
be enough to supply 40bn-80bn cubic metres annually, or 5-10 per cent
of the EU's forecast gas demand in 2020. A European Commission paper
puts the figure higher - at 10-15 per cent of demand.
David Woodward, the head of BP, the British oil company, in Azerbaijan,
says: "Our view is that with full assessment of Caspian resources
it's quite possible they will provide an additional source of supply
to Europe."
BP is completing the South Caspian Pipeline - taking gas from a
new Azeri offshore field to Georgia and Turkey. This could one day
be the first link of a route deep into Europe. But much depends on
finding enough gas to justify such a scheme and on the EU's ability
to persuade gas producers and transit countries to back ambitious
cross-border transit schemes. Mr Woodward says the EU has lagged
behind the US in developing consistent policies for securing access
to new Caspian resources.
EU diplomats retort that this is unfair. The European Commission
has since 2002 been developing an institution called the Energy
Community which regulates energy markets, including gas, in the
EU's future member states in south-east Europe. Turkey is considering
joining. Georgia, Armenia and Azerbaijan could be invited next year. By
2010 EU energy market rules could reach the Caspian.
The start later this year of a pipeline between Turkey and Greece
will open a first portal for Caspian gas to Europe. The Energy
Community lists seven other projects to boost capacity in existing
networks to absorb Caspian gas. The European Commission also backs
a more ambitious scheme for a whole new pipeline - the â~B¬4.4bn
($5.6bn) Nabucco project. This 3,400km route would start in eastern
Turkey and run to Austria, taking gas from the SCP and from Russian,
Iranian and North African producers.
Mr Woodward argues in- vesting piecemeal in existing networks may be
less risky than a single new pipeline.
--Boundary_(ID_1JcmPEuGTxzsdd7SzTyWQg)- -
From: Emil Lazarian | Ararat NewsPress
By Stefan Wagstyl in London and Isabel Gorst in Moscow
FT
July 7 2006 03:00
A southern export route for Caspian gas to Europe was first mooted
after the 1991 collapse of the Soviet Union and the emergence of three
new energy-rich states - Azerbaijan, Kazakhstan and Turkmenistan. But
the idea has been given new life by recent increases in energy prices,
and European concerns about the security of Russian gas supplies.
Jeffrey Waterous, chairman of Global Union Energy Ventures, an
investment company, says: "Whether or not Gazprom will cut off supplies
again is not the point. What's important is that the perception of
risk that this might happen is high."
But the European Commission and other supporters of the proposal face
formidable political, financial and technical challenges. Significant
amounts of Caspian gas are not expected to reach the EU before about
2015 - and then only if gas prices remain high. Preliminary estimates
that the Caspian region holds about 9,000bn cubic metres of gas,
are dwarfed by the figures for Russia and Iran, which together own
about 68,000bn cubic metres, nearly half the global reserves.
Oil companies argue such estimates are conservative and there could
be enough to supply 40bn-80bn cubic metres annually, or 5-10 per cent
of the EU's forecast gas demand in 2020. A European Commission paper
puts the figure higher - at 10-15 per cent of demand.
David Woodward, the head of BP, the British oil company, in Azerbaijan,
says: "Our view is that with full assessment of Caspian resources
it's quite possible they will provide an additional source of supply
to Europe."
BP is completing the South Caspian Pipeline - taking gas from a
new Azeri offshore field to Georgia and Turkey. This could one day
be the first link of a route deep into Europe. But much depends on
finding enough gas to justify such a scheme and on the EU's ability
to persuade gas producers and transit countries to back ambitious
cross-border transit schemes. Mr Woodward says the EU has lagged
behind the US in developing consistent policies for securing access
to new Caspian resources.
EU diplomats retort that this is unfair. The European Commission
has since 2002 been developing an institution called the Energy
Community which regulates energy markets, including gas, in the
EU's future member states in south-east Europe. Turkey is considering
joining. Georgia, Armenia and Azerbaijan could be invited next year. By
2010 EU energy market rules could reach the Caspian.
The start later this year of a pipeline between Turkey and Greece
will open a first portal for Caspian gas to Europe. The Energy
Community lists seven other projects to boost capacity in existing
networks to absorb Caspian gas. The European Commission also backs
a more ambitious scheme for a whole new pipeline - the â~B¬4.4bn
($5.6bn) Nabucco project. This 3,400km route would start in eastern
Turkey and run to Austria, taking gas from the SCP and from Russian,
Iranian and North African producers.
Mr Woodward argues in- vesting piecemeal in existing networks may be
less risky than a single new pipeline.
--Boundary_(ID_1JcmPEuGTxzsdd7SzTyWQg)- -
From: Emil Lazarian | Ararat NewsPress