Among the possible alternatives are several options of liquefied natural gas (LNG) supplies from the United States, Qatar, Australia, New Zealand… And the coming week promises a heated debate in Baku during the 8th meeting of the Southern Gas Corridor Advisory Council.
The European Commissioner for Energy Kadri Simson is expected to visit for discussions with Azerbaijan on the possibility of increasing gas supplies to Europe via TAP. The commissioner is scheduled to meet with Minister of Energy Parviz Shahbazov and Minister of Ecology and Natural Resources Mukhtar Babayev. The parties will discuss Azerbaijan’s capacity for increased diversification of gas supplies to Europe. The EU is not hiding its concerns about the possible reduction of Russian gas supplies to Europe as a response to Western sanctions in the event of an escalation of the conflict in Ukraine.
And the danger is great indeed. Europe gets more than 40 percent of its natural gas from Russia, one-third of it coming via Ukraine. True, Nord Stream 2 is finally ready for operation, but it will not be commissioned any time soon, largely because of the US bans. Wishing to somehow offset these losses, President Joe Biden’s administration is negotiating with Qatar on possible supplies of liquefied natural gas (LNG) to Europe in case a Russian invasion of Ukraine would lead to natural gas shortages on the continent. Biden intends to invite Qatar’s emir Sheikh Tamim bin Hamad Al Thani to the White House for this purpose. At the same time, the State Department is in talks with US liquefied gas producers, exploring the potential of the companies capable of handling major gas supplies. The US has also approached Norway, the EU’s second-largest gas supplier which satisfies about a quarter of the Union’s demand. In a word, Washington is doing its best to provide Europe with alternative gas supplies.
Meanwhile, according to media reports, the number of LNG tankers in the waters of the European Union countries has increased dramatically—there are already 40 of them there this month. Furthermore, over 20 vessels, which in November last year had been delivering LNG to the Asian region, were spotted on the sea routes between Europe and the Middle East or North America this January. Whether it was the US persuasiveness or Europe’s high gas prices that worked, it eventually led to a slight stabilization of prices in the continent’s gas market. In the four weeks of January this year, Europe received 10.44 billion cubic meters of gas, surpassing the January 2019 record. The utilization rate of European terminals has increased. And there are fewer calls for Russia to increase supplies.
At the same time, the EU is well aware that the tension in the European gas markets will persist for some years. Accordingly, gas prices may also return to the record levels of December, or climb even higher. In case of an escalation of tension between Russia and Ukraine, this picture is not improbable. That is why the European Commissioner for Energy, energy ministers and heads of the relevant companies from different countries are going to Baku to get more gas. Fortunately, there is a convenient opportunity— the 8th meeting of the Southern Gas Corridor Advisory Council, traditionally held in Baku in February.
And we can safely say that this is the smartest choice. Azerbaijani gas today is the cheapest on the European market, as confirmed by European consumers themselves. There is also everything necessary for expanding the supplies—from our own capabilities to step up gas production and transportation to using Turkmen gas for this purpose. Once the decision is made, the implementation of one of these options is just a technical matter. Of course, with all the will in the world, Azerbaijan is unable to fully satisfy the gas demand in all of Europe. That is not the point: today we are concerned with the risks that the continent may encounter in a worst-case geopolitical scenario. Extra billions of cubic meters of Azerbaijani gas will help ease the tensions in the market.
In this context, President Ilham Aliyev’s recent statement that Azerbaijan is becoming a very important player in the international energy market for at least a hundred years to come sounded very promising. It can also be viewed as a call by the head of state to the EU for further expansion of bilateral cooperation.
Translated from haqqin.az