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US expert: â€œAzerbaijanâ€™s role as gas supplier and transit country for Europe and Balkans growsâ€

09 August 2010 12:00 (UTC +04:00)

â€œThe good news for the Balkans comes from the Caspian in the form of the recently signed Azerbaijan-Turkey transit deal that sets the transit price for Azerbaijani gas passing through Turkeyâ€ , he said. The analyst reminded that, Azerbaijan, the western state on the Caspian shores is a major producer of natural gas and of oil: â€œIt has been the darling of the big western oil companies for over a decade now, because its energy markets are open to direct foreign involvement. In light of this, an international consortium is developing and operates the Shah Deniz natural gas field where the local oil and gas company SOCAR has only a minority share. This structure helps ensure that market principles rather than politics drive the deals forward and that the price of natural gas is transparentâ€.

Grgic said that the Balkan peninsular states should find Azerbaijanâ€™s Caspian alternative to the Russian gas interesting. â€œFirst, it is a market driven set-up, and second, Azerbaijan has no hang-ups about spheres of influence, and like the Balkan countries, is pursuing a future within the Euro-Atlantic structuresâ€, - he added.

The political analyst points out that the situation changed in the root: â€œFor a long time the main roadblock to accessing Azerbaijanâ€™s gas was Turkey. Ankara has an ambition to become an international energy hub, and this has stood in the way of agreeing a transit formula with Baku. No more. This agreement was finally signed last month between the two heads of state. A provisional plan on how to get the Azeri gas to the Balkan consumers is already in the making. Gas will be piped via the existing infrastructure from Azerbaijan to Georgia to Turkey and on to Bulgariaâ€.

â€œSecond, the connection to Azerbaijan can yield a future connection to Turkmenistan. Azerbaijan and Turkmenistan are already working on a way to link their gas lines under the Caspian Sea. Turkmenistan is considered to have one of the worldâ€™s largest deposits of natural gasâ€ â€“ he said.

Now is the time for big strategic vision in the Balkans, the expert believes.
â€œNatural gas from the Shah Deniz field will be available as early as 2014. The field is already in the development phase, and the consortium is talking to interested buyers. The volumes of natural gas from this field are limited, so there’s not much room for deliberation. Energy security is a good pretext then, and a good reason for the Balkan leaders to pay an official visit to Baku still this yearâ€, - he added.

Borut Grgic also reminds about Nabucco â€“ â€œthe project that never seems to stop being planedâ€. He asks if the Balkan states count on it to ensure their own energy security. â€œThe answer is no, for two reasons. First, the Nabucco pipeline is about shipping gas from the Caspian to the Baumgarten, Austria trading platform and from there to third markets in Western Europe. As the energy price in Western Europe is higher, buying gas in Baumgarten is likely to be much more expensive for the Balkan countries than buying it directly from the Caspian suppliers. Second, the pipeline is still a paper tiger, in other words, it continues to lack financing and real political support to make itself operationalâ€ â€“ Grgic added.