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Azerbaijan poised to launch compressed gas export to Europe

26 January 2010 13:18 (UTC +04:00)

The latest alternative to the long-stalled EU-backed Nabucco gas export pipeline is Azerbaijanâ€™s intention to export national gas across the Black Sea in the form of compressed natural gas (CNG).

Georgia also takes interest in Azerbaijanâ€™s intentions to diversify gas export routes and options to Europe because any route finally goes through Georgia.

Speaking to bne (www.businessneweurope.eu), Georgiaâ€™s first deputy minister of energy, Mariam Valishvili, said her government hopes to offer an alternative route to the European market for Azeri gas with the construction of a CNG export terminal on the countryâ€™s Black Sea coast.

Valishvili explains that Azerbaijan and Romania recently signed an agreement for the export of Azeri gas arriving in Romania as CNG to Europe, for which a CNG export plant in Georgia would be an essential component.
"We want to be part of that corridor," she says, explaining that gas could be supplied through the existing BP-operated South Caucasus gas Pipeline, which is already carrying Azeri gas to Turkey via Georgia, and carried to the coast at Supsa, a Black Sea port city in western Georgia, through existing soviet-era lines which are currently being rehabilitated. There the gas can be turned into CNG in a plant with an initial capacity of between 5bn-10bn cubic metres per year (cm/y), she says. That gas will then be shipped by special CNG tankers across the Black Sea to the Romanian port of Constanta, where Romaniaâ€™s state gas company Romgaz is already developing plans for a CNG import terminal.

Stressing that the project is still very much in the early stages and that both formal talks with Azerbaijan and a full technical feasibility study have yet to be launched, Valishvili explained that if given the go-ahead, the route could also be used to export gas from other Caspian region suppliers including gas-rich Turkmenistan, which currently has to export most of its gas through Russia. "In that case, the plant could be expanded to handle anything between 15bnâ€“30bn cm/y," she said, adding that in that event CNG could be sent to terminals other than in Romania.

In addition to expansion of gas export through pipelines, Azerbaijan has recently takes great interest in exports CNG to Europe by avoiding high transit charges. Also, the State Oil Company of Azerbaijan Republic (SOCAR) owns a Black Sea terminal, Kulevi, in Georgia.

As part of President Ilham Aliyevâ€™s visit to Bulgaria in November 2009, the Ministry of Industry and Energy of Azerbaijan and the Ministry of Economy, Energy and Tourism of Bulgaria signed a memorandum on cooperation which provides for many areas of cooperation, including the supply of compressed natural gas to Bulgaria, and the implementation of the Southern Corridor Project.

â€œNatural gas will be transported by tankers to the port city of Varna in Bulgaria. Azerbaijan hasnâ€™t carried out such transportation before. This is a new way for us. In this regard, both sides will set up working groups, conduct research and analysis. Some related projects and proposals have already been submitted to the Ministry of Industry and Energy of Azerbaijan and SOCAR,â€ Minister of Industry and Energy Natig Aliyev told a press conference after the trip to Bulgaria.

Azerbaijan also held similar negotiations with Romania.

In the same month, SOCAR President Rovnag Abdullayev also said the company is exploring the option of converting natural gas into compressed form at its Kulevi Terminal in Georgian coast of the Black Sea and send by tanker to Bulgaria and Romania where the compressed gas can be pumped into pipelines to reach the European market.

If found feasible, SOCAR will build a plant at Kulevi Terminal to convert natural gas into compressed natural gas known as CNG, he added.