Intervie withFrank Umbach in Trend News Agency, a leading news provider from the Caucasus, Caspian and Central Asian regions17. February 2012

The TANAP agreement has fundamentally changed the situation around bringing Caspian gas to Europe, Frank Umbach, Senior Associate and Head of the Programme “International Energy Security” at the Centre for European Security Strategies (Berlin) told Trend on Thursday.

This agreement changed the situation much more than BP’s proposal for the the South-East Europe Pipeline (SEEP), said Mr Umbach who is also Associate Director at the European Centre for Energy and Resource Security (EUCERS) at the King’s College, London.

Azerbaijan and Turkey signed a memorandum of understanding to establish a consortium. It will build a pipeline to supply gas from the “Shah Deniz” field in Europe through the Turkish territory.

The expert said the TANAP pipeline also means that a shorter and cheaper Nabucco-pipeline version needs to build (some representatives already called it “Nabucco-West” or Nabucco-short”)

“The TANAP will lessen the Nabucco’s (original) strategic value, given that the major control of the Shah Deniz II gas exports via the TANAP pipeline will lie almost exclusively by Azerbaijan itself rather than by a European Pipeline Consortium. But the TANAP pipeline does not correct the overall strategic objectives of the Southern Corridor project to bring Caspian gas to Europe and to diversify the EU’s rising gas imports,” Mr Umbach said.

Nabucco gas pipeline is designed to transport gas from the Caspian region and Middle East to the European countries. The launch of construction is scheduled for 2013, the first supplies via this pipeline are scheduled for 2017. The project’s partners include the Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and the German RWE.

“I think the original Nabucco-Project is no longer realistic. But the overriding strategic interest of the EU to bring Caspian gas to Europe has become more realistic with the TANAP pipeline,” Mr Umbach told Trend.

He noted more uncertainties have emerged with one of the strategic aims of the European Commission’s Southern Corridor project and the Nabucco-pipeline, namely the Trans-Caspian Pipeline.

The expert believes Azerbaijan has meanwhile much more gas available also from other newly found gas fields (Absheron, Umid etc.) for its future gas exports.

“It’s no longer the 10 bcm of the Shah Deniz II, which matters and play the only significant role for filling a strategic pipeline to Europe,” Mr Umbach said.

He said however the EU’s strategic interest to bring Turkmen gas via a Trans-Caspian pipeline has not changed nor the interest of the Turkmen government to diversify its gas exports as much as and as soon as possible.

The Turkmen President has declared last December that the export of Turkmen gas to Europe is currently the most important foreign policy objective of his country.

Mr Umbach noted Azerbaijan and Turkey have also repeatedly declared that they want also become a major transit state for gas transports from Turkmenistan and other Central Asian gas exporters.

Furthermore, blocking the Transcaspian pipeline project from Azerbaijan and Turkey would have major foreign policy and economic implications in their bilateral relationships with Turkmenistan, he believes.

He also said both countries (Azerbaijan and Turkey) have also no strategic interest that Turkmenistan would become totally dependent on Russia.

“Thus all three – the EU, Azerbaijan and Turkmenistans – have a common long-term strategic interest far beyond the pipeline discussions of bringing Turkmenistan closer to Europe and maintain a goof and strategic relations with Turkmenistan. Given the European Commission’s direct negotiations with Turkmenistan since last September, the EU’s repudation and credibility is at stake – in particular because Turkmenistan is already building an internal East-West gas pipeline to fill a future Transcaspian pipeline to Azerbaijan,” Mr Umbach said.

The contract to develop the offshore Shah Deniz field (1.2 trillion cubic meters of gas) was signed June 4, 1996. Participants to the agreement are: BP (operator) – 25.5 percent, Statoil – 25.5 percent, NICO – 10 percent, Total – 10 percent, LukAgip – 10 percent, TPAO – 9 percent, SOCAR-10 percent.

ITGI and TAP realistic as complementary projects with Nabucco

ITGI and TAP are only realistic as a complementary project with Nabucco, but not with South Stream, Senior Associate for International Energy Security at the Centre for European Security Strategies (Berlin) Frank Umbach told Trend on Thursday.

With the EU’s 20-20-20 programme, the EU’s energy and gas demand will significantly be lower than forecasted until 2006. Thus the expansion of LNG-imports as well as the Nabucco-pipeline was already no longer viable before the European Commission’s decision of last December to block Gazprom’s acquisition attempt of a 50% stake at the Central European Gas hub (CEGH) in Baumgarten (Austria), where the Nabucco-pipeline would end,” Mr Umbach said who is also Deputy Director of the European Centre for Energy and Resource Security (EUCERS) of the King’s college (London).

He said thus there will be no transit of the South Stream pipeline through Austria any longer, only a small spur.

“The South Stream pipeline will now terminate in Italy (which would hardly need the full capacity of South Stream, which was foreseen as the main customer of the ITGI and TAP-pipeline. Furthermore, the European Commission’s position was already before the December decision on South Stream that the Nabucco-pipeline and the ITGI and TAP-pipeline projects should merge in one or another way,” Mr Umbach said.

“Southern Gas Corridor” is one of the priority energy projects for the EU. It is intended to diversify the routes and sources of supply and thereby increase the energy security of the EU. The ‘Southern Gas Corridor” include: Nabucco gas pipeline, Trans Adriatic Pipeline (TAP), ITGI (Turkey-Greece-Italy pipeline),”White Stream”.

The “South Stream” project is implemented in order to supply Russian gas to European consumers. For the implementation of the onshore section Russia signed intergovernmental agreements with Bulgaria, Serbia, Hungary, Greece, Slovenia, Croatia and Austria. The project’s participants are “Gazprom” (50 per cent), the Italian Eni (20 per cent), German Wintershall and French EdF (15 per cent each).

It is planned that the pipeline will consist of four branches, each containing15.57 billion cubic meters. Commissioning of the first of them is scheduled for December 2015, the output at full capacity (63 billion cubic meters) is expected by 2018. The estimated cost of the “South stream” is 15.5 billion euros, 10 billion of which fall to the marine area, and 5.5 billion – to land.