Ali Kayalar Moscow is gaining more influence through new deals to provide natural gas for Europe and might become the sole supplier in the continent soon, experts say.
September , 2011
Russia’s Gazprom has taken another step forward in a fierce competition to carry natural gas to the European Union after a hot week of deals, share transfers and critical decisions.
The EU’s decision last week to “directly” negotiate a treaty with Azerbaijan and Turkmenistan was a move that weakened Turkey’s position in both buying and transferring natural gas to Europe, according to Necdet Pamir, a board member at the World Energy Council Turkish National Committee.
Turkey has already signed “unbeneficial” accords regarding Nabucco, the languishing project to carry Caspian gas to Europe, according to Pamir. “Nabucco is an important project for both Europe and Turkey in terms of supply security,” he told the Hürriyet Daily News, adding that current contracts are not in Turkey’s favor.
“The state-owned Turkish Pipeline Company, or BOTAŞ, correctly insisted on better transfer prices and the right to sell the gas in a bid to turn the country into an energy hub,” Pamir said. “Unfortunately, the government could not achieve these benefits.”
Azerbaijani Industry and Energy Minister Natig Aliyev said last week that the remaining conflicts between Turkey and his country about a supply deal are over costs.
Russia meanwhile reacted harshly to the EU’s decision to negotiate directly with Azerbaijan and Turkmenistan. “Outside attempts to meddle in affairs in the Caspian ... could very seriously complicate the situation in this region [and] negatively affect the ongoing five-party negotiations on the Caspian Sea’s legal status,” the Russian Foreign Ministry said on its website.
In another development, Russian behemoth Gazprom strengthened Moscow’s hand by adding France’s EDF and Germany’s Wintershall to its South Stream, and launching the Nord Stream. Russia announced that the first unit of Nord Stream, which will transfer gas to Germany via the Baltic Sea, bypassing Ukraine, will be finished by the end of this year. The project is expected to cut gas carried over Ukraine by 50 percent.
An energy market professional close to the issue said that with Nord Stream, which is a more concrete project than either South Stream or Nabucco, Russia is nearing its goal to become almost the sole natural gas supplier for Europe.
“Domestic production in Europe is falling since the resource in Norway is old,” the source told the Daily News, speaking on condition of anonymity. “Europe will have to meet 74 percent of its natural gas [needs] from Russia by 2030.”
Regarding possible suppliers of gas for the Nabucco pipeline, Pamir said Iranian resources can scarcely meet domestic demand of 137 billion cubic meters annually. “Iraq, another possible supplier, is facing political problems,” Pamir added.
Commenting on other handicaps of Nabucco, Pamir said the project’s initial cost was calculated at 4.6 Billion euros. “Today it is estimated at more than 12 billion euros,” he said....
“Russia has constructed pipelines and knows how to play this game,” Pamir said. “The U.S. is rising with shale gas, but Russia has the potential to become the main actor once again.”