Azeri Minister: We share same ideas with EU as to diversification of gas exports to Europe - INTERVIEW Energy
Azeri Minister: We share same ideas with EU as to diversification of gas exports to Europe - INTERVIEW
Azerbaijani energy minister Natig Aliyev’s interview to APA
- Realization of the Southern Gas Corridor project coincided with the period of cheap oil. The head of state, you and other officials repeatedly said there is no delay in implementation of the project, on the contrary, we are ahead of schedule. Are the shareholders of the some components, for example TAP, TANAP and etc. of the Southern Gas Corridors concerned over the prioject?
- First of all, to note that the Southern Gas Corridor is very important for Azerbaijan, region, as well as the European countries. Generally, we are controlling the SGC realization process. Head of the state Ilham Aliyev created an Advisory Council. I think this mechanism justified itself. Because ministers of SGC countries are constantly in touch with one another. This allows us to find out any problem at the initial stage and solve them.
You know that known events happened in Turkey. However, I don’t think this will have impact on the SGC realization. Turkey views the TANAP project as its own.
Moreover, Greek PM Alexis Tripras made speech in the groundbreaking ceremony of the TAP project and anounced that Greece government supports this project and will do their best for its realization timely.
Along with this, Italian government also made analogical speeches. Despite the federal government supports the TAP, there are local displeasures. They claim as if the TAP will damage the ecology. But I raised this question in the meeting of Azerbaijan-Italy Intergovernmental Commission. We, foreign and energy ministers discussed this issue and they assured us that there is not any difficulty in this issue, necessary measures will also be taken in the autumn. Let me note that these processes don’t affect the schedule of realization.
Today, our main duty is to complete the works on Shahdeniz 2 by 100%. Firstly, this will allow us to deliver our gas to Europe in the volume we want. Second, we’ll have opportunity to completely fulfil our obligations. Otherwise, we’ll have to pay fines as a party unfulfilling the obligations. Increase of export volume of our natural gas is very significant. On the other hand, we insure ourselves – we’ll not be fined, on the contrary, we can raise a claim against purchaser in case they are not ready to receive the gas.
Regarding TAP, despite the government states it supports this project, there are some uncertainties. However, this uncertainty will be against them. As I mentioned before, they have obligations according to the signed intergovernmental contracts. On the other hand, they will not purchase gas. Turkey stands by us and we’ll fulfil our obligations. As you know, we must transport 6 billion cubic meters of gas by 2018, 10 billion cubic meters by 2020. They need this project more than us.
Mr. Minister, an interesting situation has come about — While the European Union and the European Commission are working hard on diversification of energy sources, some EU member countries are taking non-adequate steps against Azerbaijan, the country selling the gas. What do you think is the reason behind it?
- There is only one answer: greater policy. The European Union began facing this kind of problems in 2008. The Ukrainian conflict is one example. This was regarded by some as a “war for gas,” while others related it to economic-political reasons. At the time we had numerous discussions with Günther Oettinger and Maroš Šefčovič. Yes, Europe’s energy map is constantly changing. A few years ago, the European Union said that Europe’s energy demand was 500 billion cubic meters and would reach 800 billion cubic meters in a couple of years. After that, they began to think of new gas sources. At the time, some European countries were 80-90%--some 100%--dependent on Russian gas. When some suggest that we should buy the 300 cubic meters from Russia, this idea was met with objection as it was going to increase dependence on Russia. Ukraine-Russian relations showed that Russia could use gas dependence to increase tariffs. Europe then acted even more careful and began looking for new sources, in other words, an alternative to Russian gas. There were several options, but they agreed on the Caspian gas as the best option. As you know, we have to deliver to Europe some 16 billion cubic meters of gas per year, and we admit that this figure is not so high. We are not saying that we will solve the gas problem of whole Europe. We have gas and we are selling it. Of course, we are interested to increase the volume of exports. We have the potential to do so. We can increase production within the Shah Deniz 2. Moreover, we have vast fields like “Absheron,” “Umid”, and “Babek.” And we do understand that even if we add the aforementioned gas field on top of this, it’s not enough to solve Europe’s gas problem. It’s very important that we share the same ideas with the EU as to diversification of gas exports to Europe.
By non-adequate steps, you must be referring to what’s going on around DESFA.
Absolutely… Because a fire starts from a small spark. And we don’t only deal with the DESFA project in Europe.
- The essence of the EU Third Energy package is to make sure there is no room for monopoly. As you know, such claims were advanced against Gazprom. As a consequence, the South Stream project was suspended. Of course somebody can say there are political colours and etc. However, the European Union chose this way and all arguments are meaningless. Similar claims were also advanced while SOCAR was acquiring 66.7% of DESFA. The EU is not a party creating difficulties in DESFA privatization. They only said must research whether or not this procedure is contrary to the requirements of the Third Energy Package. But we explain that SOCAR is not a monopolist. Because we don’t own 100% of transporting gas. As you know, that gas belongs to all consortiums. On the other side, we don’t own 100% of transportation system either. In other word, SOCAR has not 100% equity in any project. New Greek government creates difficulties. They try to have political dividend. This tendency continues today. We are yet analyzing the situation. You know that after amendments, DESFA shares went down twice. Such statements are made that why we need the privatization of DESFA.
- Maybe, you can answer this question.
- We should deeply conduct analysis. We should clarify what the privatization of DESFA will contribute to our state in this situation and how it will be profitable for SOCAR.
- Concretely, may SOCAR refuse DESFA privatization?
- It is difficult to say about it now. We must reconsider the proposals. You know that according to recommendations of the EU, SOCAR reduces its share in DESFA from 66% to 49%. Negotiations on selling 17% to Italy’s Snam Company are underway. I said DESFA purchase is advantageous for us because we will become distributor in Europe. Moreover, we get opportunity to sell our gas to Bulgaria through Bulgaria-Greece interconnector. In any case we don’t lose anything”.
- You thoroughly spoke about DESFA issue, but our interest in Greek market doesn’t cover only this gas operator. Can we expect any inadequate step from the Greek government regarding TAP project?
- It is an internal affair of the Greek government. Greek government was insisting on privatization of DESFA in the past. I don’t see anything wrong with the current situation. As for TAP, the Greek government has obligations regulated by intergovernmental agreements. I don’t think that they would change mind regarding TAP. Let’s note that main power in TAP project is consortium, shareholders. Currently, the Greek government needs TAP project more than ever. This project will bring major investments in the country, new jobs will be created and so on. We are speaking about a long-term project. Any country wishes projects like TAP to pass through its territory.
You are probably thinking about other markets as a backup option?
- In general, we are recently focused on the Balkan countries. Azerbaijan has signed an agreement with Albania on gasification of the country. As you know, gasification of Albania is not satisfactory. Thus, it was decided to gasify Albania's economic entities with the participation of Azerbaijan. According to the plan, gas storage, gas network will be created in Albania. Bosnia and Herzegovina also appealed in this regard. The Balkan countries have poorest gas network in Europe. We see good prospects here. As the volume of gas we export is increasing, our interests go beyond Greece and Italy towards the Balkan countries. Regular negotiations are underway in this regard. However, we must act in accordance with thought-out plan, instead of statements.
- I would like to continue my question. Bulgaria is actively working on "Balkan Gas Hub project". Bulgaria's Prime Minister Boyko Borisov stated that gas may be pumped to the Hub from Azerbaijan, Russia, Iran and Turkmenistan. What is the position of the Azerbaijani side?
- I want sincerely to say that I have been hearing these rumors for 20 years. However, no gas hub was created in this regard within 20 years. It needs a political will of gas supplier. The announcement of such projects is nothing different from any politician's statement. Boyko Borisov said that he would turn his country into a hub. With which gas? Let's assume that they mean Russian gas. Bulgaria has previously suspended South Stream natural-gas pipeline project. Today, Russia is expanding its partnership with Turkey. Thus, Bulgaria was again bypassed. On the other hand, Bulgaria doesn’t have real communications. Sofia can only realize the construction of Gas Interconnector Greece - Bulgaria (IGB). The European Union also supports this project. Where can Bulgaria sell gas after the construction of Gas Interconnector Greece - Bulgaria (IGB)? There is only one variant –Azerbaijan. This is today's reality. The interesting point is that we have entered into giant projects, but made statements in this regard after signing relevant documents. But, Bulgaria has been making such statements for many years, though it has no gas, no infrastructure and no agreement.
I would like to ask a question about the delivery of Turkmen gas to Europe. How real is Turkmenistan’s use of Azerbaijani infrastructure under the present circumstances?
- Turkmen gas delivery to Azerbaijan or transporting it to Europe through the territory of Azerbaijan is quite possible these days. “I assure you that there is not any technical problem in this issue. We can easily do that. We have built gas pipelines. This issue has been repeatedly discussed with Turkmen counterparts. However, the Turkmen side made no decision. Turkmenistan had good relations with Russia and they were selling their gas to Russia. However, thereafter, they began to work with the Asian markets. Turkmenistan repeatedly said to EU officials it is ready to sell 30 billion of gas to Europe. Turkmenistan says that they send the gas to Azerbaijan, the other side of the Caspian Sea, and we have to deliver it to Europe ourselves. This approach is not serious. The negotiations should be carried out in this way. After such an approach to the question a hundred more questions arise on my mind. In other words, there have to be a political will and a certain idea for the implementation of such projects. I remember Günther Oettinger happily say during the meeting with me that he had managed to persuade the Turkmen side. That's all. We will deliver Turkmen gas to Europe. As a man who has been dealing with this issue for 20 years, I said that I should not indulge in euphoria. They have not left a signature under any agreement so far. There should be pragmatism in every work.
- In other words, shouldn’t we hope much for the statement Turkmen president made at the meeting with German Chancellor Angela Merkel?
- According to the statement, Turkmenistan stands ready to transport its gas to Europe. We have heard such statements. Everything should be concretized at the negotiating table, and a "road map" should be developed. I I personally have discussed this issue with the president of Turkmenistan. He said that Turkmenistan is ready to deliver 10 billion cubic meters gas to Azerbaijan. Very nice! The question is not about a small amount. However they regard the trans-Caspian pipeline like: we provide gas and let someone build the pipeline. Azerbaijan? Personally, I disagree with it as a minister. As for the European Union, it cannot do it as it is a political body. If the European Union is interested in it, then their companies should discuss it. You know the next procedure.
I suggest the issue about neighbours continues. In connection with the FETO events, there were detentions in SOCAR Turkey Energy and Petkim—both of which have SOCAR’s assets. Do you think these events could affect projects in Turkey implemented by SOCAR?
- I do not think that the events could damage of Azerbaijani-Turkish relations or Azerbaijan's projects, including SOCAR’s activities in the fraternal country. I know one thing that the Azerbaijani-Turkish brotherhood is eternal. Turkey views the TANAP project as its own.
- Shall we worry about the developing Turkey-Russia relations? I’m asking this because Gazprom has already obtained Ankara’s consent for the restoration of the Turkish Stream project. Gazprom President Alexey Miller said Ankara would allow Russian gas to be delivered to the Greek borders.
- Turkish Stream emerged following the suspension of the South Stream project. However, the project's throughput capacity is 63 billion cubic meters. I cannot understand so far, who would need 63 billion cubic meters of gas? In the current situation, Turkey fully meets its demands for gas and a serious future demand for gas seems unlikely. Now, let's look around Turkey. Russia already supplies gas to Bulgaria via a different route. Greece does not need gas. But who the 63 billion cubic meters of gas will be sold to? I hope that the parties have answers to these questions. If you want to deliver gas to Greece, are a lot of questions arise because there is no contract between the parties.