Azerbaijan and the EU have agreed to transport Azerbaijan’s natural gas supply from the Caspian basin to Europe via pipeline. The joint declaration on the “Southern Gas Corridor” (SGC) was signed by Azeri President Ilham Aliyev and the President of the European Commission José Manuel Durão Barroso. As part of the deal, the European Union opens its markets to Azerbaijan while Azerbaijan sends “substantial volume” of gas to the EU.
The EU has been seeking an alternative gas pipelines connecting Russia to the EU. In recent years regional conflicts have disrupted gas distribution to Europe. The SGC is the EU’s alternative solution.
"This is a major breakthrough. This agreement confirms Europe's direct access to gas from the Caspian basin, thus enabling the realization of the Southern Corridor. This new supply route will enhance the energy security of European consumers and businesses," said Barroso.
The SGC is yet to be completed. The Nabucco pipeline could be the obvious choice. The proposed 3,300-kilometer project, backed by UE and the US, would link Erzurum in Turkey to Baumgarten an der March in Austria. The consortium that would build the Nabucco was awaiting an agreement to luck up sufficient gas supplies for the pipeline. Today’s agreement would provide the supplies.
Now Azerbaijan has to choose among proposed pipeline projects to transport its natural gas to Europe. Aside from Nabucco, there is the “South Stream” pipeline, backed by Russia, transporting natural gas from the Black Sea port of Beregovaya to Bulgaria and on to Italy and Austria. If it chosses Nabucco, as expected, the construction of the $11-billion pipeline could start immediately and be completed by 2015.
The SGC is the second major agreement in as many months involving the transport of Caspian basin supplies to major world markets. Turkmenistan, Afghanistan, Pakistan and India last month announced their agreement to build TAPI pipeline, transporting Turkmen natural gas to India.
Iran, sitting on the world’s second largest natural gas reserves, has significantly been left out of both major agreements.