EU wants ‘Mediterranean hub’ for Azeri gas

The European Union is looking southwards to develop a “southern gas corridor” for natural gas from Azerbaijan to fuel the European mainland.

The European Commission released an EU energy security strategy earlier this week, in response to the political crisis in Ukraine which is threatening gas supplies from Russia, after Russian President Vladimir Putin warned that Russia could cut off supplies to Ukraine unless the latter starts to pay off its gas debt, which Russia’s Gazprom says stands at €2.5 billion.

A key policy that also ties in with the Maltese government’s prospective energy shift to gas, supplied by Azeri state corporation SOCAR, will be the creation of the southern corridor running from the Caspian region and into Italy.

Beyond improving trade with the region, the EC said this week it wants to see the development of a “critical infrastructure”, whose viability ultimately depends on having access to sufficient export volumes.

It is now expected that by 2020, 10 billion cubic metres (bcm) of natural gas produced in Azerbaijan will reach the European market through the southern gas corridor.

“Moreover, this new pipeline connection is vital in providing a connection to the Middle East. The currently envisaged infrastructure in Turkey could accommodate up to 25 bcm/y for the European market. In the longer term perspective, other countries such as Turkmenistan, Iraq and Iran, if conditions are met to lift the sanctions regime, could also significantly contribute to the enlargement of the Southern Gas Corridor,” the Commission said.

The more interesting keyword is the “Mediterranean gas hub” which the EU would like to develop in the south of Europe together with North African and Eastern Mediterranean partners.

Malta will be supplied with natural gas on an 18-year charter of a floating storage unit from SOCAR Trading, which has the exclusive right to supply LNG to a new 200MW plant at Delimara.

Electrogas is made up of Gasol, SOCAR, Gem Holdings (Tumas and Gasan business groups) and Siemens Projects Ventures. So far, only Gasol has acquired the special purpose vehicle with all the necessary permits to undertake the project for €30 million.

Italy is also placing increasing importance on completing the Trans Adriatic Pipeline (TAP) to bring Azeri gas to Italy, but is also supporting the South Stream project, which will transport Russian gas bypassing Ukraine.

Italy is angling at becoming a southern European gas hub able to transit African supplies into Europe as it develops reverse flow capabilities at its northern borders.

Deputy Industry Minister Claudio De Vincenti has said that Italy is also looking at developing a gas link with the East Mediterranean.