Guest blog post by Fuad Shahbazov.
Trans-Adriatic pipeline (TAP), which is a part of the Southern Gas Corridor envisages the transportation of Azerbaijani natural gas (10 billion cubic metres) to the southern part of Europe, mainly to Italy. Thus, the European Union aims to diversify the energy resources in Europe and expels Russia’s energy giant “Gazprom” from EU energy market.
Following the Trans – Anatolian pipeline (TANAP) which will allow Azerbaijani gas exports to Europe through Georgia, and Turkey, TAP project will be the last link of Baku – Tbilisi – Erzurum pipeline (the South Caucasus pipeline). This project opens broad opportunities for Azerbaijani gas to such European markets as Italy, Switzerland, Germany and etc. The present TAP shareholders are BP (20%), Azerbaijan’s state company SOCAR (20%), Norway’s Statoil (20%), Belgium’s Fluxys (19%), Spain’s Enagás (16%) and Swiss-based Axpo (5%). At the beginning, the pipeline will export 10 billion cubic metres of Azeri natural gas to Europe from Shah – Deniz 2 gas field with the option to expand the capacity up to 20 billion cubic metres per year. According to estimates, the project that costs 5.6 billion euros will cover up 17% of Italy’s annual energy intake, while Russia’s “Gazprom” in 2015 delivered 24.42 billion cubic metres of natural gas to Italy. Despite the Russian senior officials and experts’ statements, it is undeniable fact that Russian energy monopoly in jeopardy.
The dependency of European energy market on Russia’s Gazprom threatens not only the energy security of countries, but also damages economic growth, and foreign investments. Therefore, TANAP and TAP projects create an irreplaceable opportunity to go beyond the energy monopoly of Gazprom. For Russia, which does not hesitate to use its energy monopoly as a tool of political oppression, both of projects evoked a shock effect over energy monopoly. Furthermore, it is expected that Gazprom’s shares in Italy will be reduced totally, or at least partly, as the European Commission declined the suggestion of Gazprom in order to re-think the perspective of the Southern Stream project. Although, the TAP project had the full backing of the European Commission, it does not look as much as attractive comparing to the Southern Stream. The matter is that several European energy consortiums including Greece are concerned about the 10 bcm capacity of the TAP project, referring to 47 bcm capacity of the Southern Stream pipeline. Yet the European Union appears to be reluctant to join Gazprom’s energy project, trying to reduce its reliance on Russia. Azerbaijan, which was a net importer of natural gas and largely dependent on Russia as a transit country for its oil exports until 2006, highly increased its role in energy field by supplying dozens of countries with natural gas.
?n fact, the future perspectives of Russia’s Gazprom in European energy market, in particular in Italy, highly depends on its price policy. That means to say that the TAP project poses no serious threat to Gazprom’s presence in the local market. Moreover, according to calculations of 2015, Gazprom, in total delivered 160 bcm of natural gas Europe, and comparing to 20 bcm of the capacity of TAP it cannot be perceive as a serious challenge to Gazprom’s monopoly. Even if the main supplier – Azerbaijan is expected to partly oppress Gazprom’s influence in Italian market, it is still quite arguable whether the country will increase the capacity of the pipeline by 2020 or not. Therefore Russia’s Gazprom will keep its dominance in European gas market approximately until 2025.