European energy commissioner Kadri Simon has landed in Baku, Azerbaijan, to discuss the prospect of extending the Southern Gas Corridor to bring supplies to more European markets, the commission said on February 3.
Simson will be joined by the commissioner for neighbourhood and enlargement Oliver Varhelyi to attend the 8th ministerial meeting of the Southern Gas Corridor Advisory Council on February 4.
“This will be an opportunity to reaffirm the strategic energy partnership between the EU and Azerbaijan and discuss the prospects of extending the Southern Gas Corridor to new energy markets, including the Western Balkans, and especially those where it could boost the coal phase-out,” the commission said.
The Southern Gas Corridor consists of three pipelines that flow Azeri gas to Georgia, Turkey and south Europe. Its final section, the Trans-Adriatic pipeline, came online at the end of 2020, flowing up to 10bn m3/yr of gas to Italy, Greece and Bulgaria.
Brussels is engaging Baku for talks as Europe faces an acute energy crunch, caused by robust demand growth and supply constraints. The discussions are also against a backdrop of heightened tensions between the West and Russia over Ukraine. Moscow has amassed a force of over 100,000 troops at the Ukrainian border, and some Western officials say it is preparing for an invasion.
EU foreign policy chief Josep Borrell confirmed on January 30 that the EU was discussing extra supply with Azerbaijan in light of the tensions with Russia.
“We are prepared in case diplomacy fails and we are looking at all options,” Borrell wrote in a commentary. “This includes improving our resilience, including by working with partners like the US, Qatar and Azerbaijan, on the issue of gas supply in case Russia decides to reduce or halt deliveries.”
Azerbaijan would be unable to provide much aid in the short term, however, as it has neither the production capacity or the infrastructure in place to ramp up supply to Europe. The country would need to invest in new gas fields, and it would likely take years for extra gas flow to come on stream.
The Southern Gas Corridor would also need to be expanded. A market test for enlarging the Trans-Adriatic pipeline failed to attract any binding bids from buyers in July last year. Extra pipelines would also need to be built to get this gas to new markets, including the long-planned Ionian-Adriatic pipeline, which would run from Albania through Montenegro and Bosnia to Croatia.
Qatar is also producing LNG at its maximum capacity, and first gas from a $29bn expansion is not expected until the latter half of the decade. According to Reuters, Doha is open to diverting some gas from buyers in Asia if Europe’s supply is disrupted, but it wants the EU to restrict the resale of this gas beyond the bloc’s borders.
Joseph Murphy
