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US analyst: I foresee that large ambitious projects like Nabucco will disappear into the night and die a slow death

28 November 2011 11:17 (UTC +04:00)

Washington. Isabel Levine â€“ APA. Gal Luft, Executive Director of the Washington DC-based Institute for the Analysis of Global Security, recently returned from Baku where he took part in the Center for Strategic Studies conference on the future of Caspian energy.

In a post-visit interview with APA US correspondent, Mr. Luft shared his opinions regarding the recent developments around the Caspian energy policy, as well as the future of a newly signed trans-Anatolian pipeline.

â€œThe good news is that the Izmir agreement between Azerbaijan and Turkey has set the stage for progress in getting Azeri gas to market, however, there are significant obstacles and unresolved issues before any Southern corridor option materializeâ€, he said.

â€œThe economic uncertainty in Europe - particularly in southern Europe - and the fragile nature of the European community impede investment and are likely to slow down progress. I foresee that large ambitious projects like Nabucco will disappear into the night and die a slow death while small, incremental projects like the SEEP (south eastern european pipeline) and TAP will gain more momentumâ€, Mr. Luft added.

APA correspondent also asked Mr. Luft if the unsolved status of the Caspian Sea impact regional energy cooperation. If so, then what should Azerbaijan and other countries do?

The analyst said he doesnâ€™t see resolution on the horizon.

â€œNor do I see a Trans-Caspian pipeline on the horizonâ€œ, he added. â€œThe overall scoreboard right now shows that Russia is getting its way while Azerbaijan gets the short end of the stick due to European lethargy and indecision. The overall stalemate and foot dragging on Azeri gas is troubling. I believe that while continuing to pursue southern corridor options Azerbaijan must develop a plan B and look into alternatives to the European market including seeking conduits to the Asian market as well as using gas as feedstock for domestic chemical industryâ€.

Mr Luft also considers that, natural gas can also be used as alternative fuel (whether in the form of methanol, gas-to-diesel or compressed natural gas) replacing petroleum. This will free more oil for exports.

â€œIf Azerbaijan indicates to Europe that there are other options under consideration and that Europe cannot take Azerbaijan for granted that will create a sense of urgency among the European stakeholders, perhaps moving the ball forwardâ€, he concluded.