Foreign

Foreign

US analyst: â€œThere arenâ€™t in fact many options for the EU to lessen risks associated with its continuing dependence on Russia in terms of gas supplies than turning the focus to the Caspianâ€ - INTERVIEW

09 March 2011 08:59 (UTC +04:00)

Washington. Isabel Levine â€“ APA. APAâ€™s Washington DC correspondentâ€™s interview with Jan Sir, an energy expert at the Johns Hopkins University’s Central Asia-Caucasus Institute

- How would you predict on demand and prices for gas in Europe? And what is the role of the Caspian region, especially Azerbaijan, in terms of diversification of energy supply sources and providing energy security for Europe?

- There are already signs that the demand is slowly recovering in European gas markets from the shock caused by the global financial crisis. And I expect the contract prices to be to a growing degree driven by spot prices which provide for a flexible pricing mechanism fostering competition in the energy markets, from which also the energy producers in the Caspian could benefit. Azerbaijan is a key link in the Southern Corridor, a multifaceted project with Western backing which has not only tremendous significance for the EU in terms of security of supply but also huge geopolitical implications for the post-Soviet countries in the Caucasus and Caspian themselves providing them with new export options and opportunities for the desired diversification of external relations.

- There are beliefs that the gas supply project from the Caspian region to Europe via Nabucco is losing its relevance. What do you think about the projectâ€™s future?

- Diversification of energy supplies is still imperative of the day which no one questions in Europe and there arenâ€™t in fact many options for the EU to lessen risks associated with its continuing dependence on Russia in terms of gas supplies than turning the focus to the Caspian. But Azerbaijan with its available resources alone can provide no viable alternative to EUâ€™s existing energy partners. And it is clear to anyone that with no guarantees of energy supplies from Central Asia it can be really hard to find enough gas to fill the pipe and thus also the resources for bringing this important project to a reality.

- What about Azerbaijanâ€™s agreement with Russia on gas export. Is it harmful for the Nabucco project, as well as Azerbaijanâ€™s energy cooperation with Europe?

- Well, the gas volumes that go to Russia are, for the moment, still modest. So the running contract by SOCAR with Gazprom as such is not that problem. What matters more is Azerbaijanâ€™s persistent vulnerability to Russia and that without Russia there can be no solution to the Karabakh issue as well as to other regional contradictions and conflicts in the Caucasus, which leaves Baku with limited room for maneuver.