Saturday, December 25, 2010

Enough Azeri Gas For Multiple Lines?

EU policy makers and some company officials have begun speaking more seriously about the Nabucco gas pipeline project cooperating with other European pipelines, according to a story in the Wall Street Journal. "Nabucco doesn't exclude being combined with other projects," according to the EU's energy chief Guenther Oettinger. "We will do our best to make the projects work together." ("Sale of Azeri Gas Field Will Test EU's Pipeline Strategy," December 24, 2010)

It is hard to imagine how such sharing of a limited natural resource will be possible. Azerbaijan has committed 10 bcm annually of gas to Nabucco (if it is ever built), but that leaves the pipeline capacity 2/3 empty. The Transcaspian Pipeline is still under negotiation, with no conclusion in sight. If other demands are placed on the Shah Deniz gas fields, such as South Stream, AGRI, TAP, etc., as well as agreements to sell gas to Iran and to Russia, there is little chance that the State Oil Company of Azerbaijan (SOCAR)could meet all the demands upon it. The only way that the European Union can guarantee access to this gas is to lock in now financing for Nabucco.

Dr. James J. Coyle is available to speak to your organization or at your event. Please contact him at