August 29, 2016

by AEA in News

SOCAR JOINS NEW ADRIATIC PIPE PROJECT

Four western Balkans nations signed a memorandum of understanding with Azerbaijan state Socar on co-operation on building the Ionian Adriatic pipeline (IAP) on the sidelines of a Dubrovnik forum 25-26 August.

The declaration of intent to develop the 5bn m³/year line was originally signed in 2007 by Croatia, Montenegro and Albania. The length of the line from Split in Croatia to Fier in Albania will be around 530 km and cost around €610mn ($683mn).

Socar will join Croatia, Albania, Bosnia & Herzegovina and Montenegro in the project which will include a section of the Trans-Adriatic-Pipeline (TAP) designed to bring gas from Shah Deniz 2 field in the Caspian Sea to EU through the so-called Southern Gas Corridor (SGC) after 2020.

Socar’s goal is to connect the Caspian Sea and the Adriatic Sea, the head of Socar Balkans, Murad Heydarov, said after the signing ceremony. “The SGC, which includes the Ionian-Adriatic gas pipeline is an important part of our plans, we have good co-operation with the countries involved in this project,” he said, according to Socar sources.

Croatia’s economy minister Tomislav Panenic said that the future pipeline would provide gas supplies for southeastern Europe. “We have defined our joint initiative for the development of the Ionian-Adriatic gas pipeline as a route that will make sure that these markets are provided with gas. We hope that this route will be a connection between the north and the south and that this may pave the way for a full liberalisation of the gas market in Europe,” he said, Croatian news agency Hina reported.

Montenegro’s economy minister Vladimir Kavaric said that IAP was the only opportunity for the gasification of Montenegro and “the government is ready to do everything to accelerate and successfully implement the project.”

According to Bosnia & Herzegovina’s foreign trade minister Mirko Sarovic, “Bosnia & Herzegovina supports this regional project and approach and ask the partners to ensure that a section of the route goes through Bosnia & Herzegovina.”

Dubrovnik Forum. From left: Presidents of Hungary Janos Ader, Lithuania Dalia Grybauskaite, Poland Andrzej Duda, Croatia Kolinda Grabar-Kitarovic, Bulgaria Rosen Plevneliev and Slovenia Borut Pahor.

According to preliminary design IAP aims to connect existing transmission system of Croatia via Bosnia & Herzegovina (offshore), Montenegro and Albania to the TAP.

The Baltic-Adriatic-Black Sea (BABS) forum brought together six presidents and high-ranking government officials from 12 EU countries and Albania on August 25-26 in Dubrovnik, Croatia. A panel discussion at the “Strengthening European energy security” looked at the benefits of energy cooperation in BABS and the role of LNG terminals linking north and south Europe.

Connecting the LNG terminal in Poland with one planned on the island of Krk in Croatia is among the energy projects that BABS region countries want to implement in order to boost competitiveness and development, Croatia’s president Kolinda Grabar-Kitarovic and Poland’s president, Andrzej Duda, said addressing forum at the opening ceremony August 25.

President Duda pointed out the importance of energy connections.“The dominance of a single supplier for the region is harmful and dangerous”, he said adding that development of the gas corridor between the north and the south, as well as the LNG terminal on the island of Krk are important.

The next meeting of BABS will take place in Wroclaw in June 2017.

August 4, 2016

by AEA in News

GETTING GAS OUT OF IRAN – NEW TRADING PATTERNS

Iran’s gas plans for Caucasus

Iran says it is preparing to triple gas exports to Armenia, start exports to Georgia and store its gas in Azerbaijan’s underground facilities.

For now, Iran barters about 1mn m³/d of gas with Armenian power at 1 m³ per 3kWh. Iran said this week that the volume of the gas-to-power deal would reach 3mn m³/d by late 2018 at the improved rate of 1m³ per 3.2kWh.

On the other hand, the managing director of the National Iranian Gas Company (NIGC) Ali Reza Kameli said August 1 that Iran has signed a deal with the Georgian International Energy Corporation to export 40mn m³ over a four-month period to test the feasibility of sealing a long term gas export agreement.

He added that that the deal becomes operational once Armenia has issued the needed permissions by late 2016.

Georgia’s deputy energy minister Mariam Valishvili told Trend that the ministry has no information on the conclusion of contracts for the import of Iranian gas to the country. Valishvili added that the Georgian government has not concluded the contracts for such gas supply. “Theoretically, private companies can sign a contract like that,” she said.

For now, Georgia receives more than 87% of its 2.5bn m³/yr demands from Azerbaijan (1.36bn m³/yr as commercial imports plus 5% of Azerbaijani gas transit to Turkey as fee) and takes 10% of Russian gas deliveries to Armenia as fee.

Iran also announced August 2 that it is willing to store its gas in Azerbaijan’s underground gas facilities. Azerbaijan has two gas storage facilities that can hold 5bn m³, of which a third is idle.

For now, two countries swap about 1mn m³/d of gas, while Iran has a 10% share in Azerbaijan’s Shah Deniz gas field.

Iran’s sole commercial buyer is Turkey. According to official statistics, Iran increased deliveries to Turkey in five months of 2016, while Azerbaijan and Russia cut gas deliveries to this country.

Iran aims to export 68bn m³/yr of gas by 2021 and is preparing to announce a joint tender with Oman for choosing a contractor to build a $1.5bn pipeline project in the Gulf of Oman, aimed to transit 10bn m³/yr of Iranian gas to Oman. Some of that gas could be liquefied as the Oman LNG terminal is not fully used.

Kameli said August 2 that “activities related to the gas pipeline project are being carried out rapidly as the marine survey has been completed and evaluation of the obtained information is being undertaken. After receiving the results of studies, we will decide with the Omani side who will be the contractor for the 200-km undersea pipeline.”

Iran is also preparing to start a restricted amount of gas supply to Baghdad this month at 5-7mn m³/d. This figure is to reach 25mn m³/d, based on agreements, in the coming years.

Iran has two agreements with Iraq to export 50mn m³/d of gas to Baghdad and Basra in total.

Iran also has a 22mn m³/d gas export agreement with Pakistan, projected to become operational in early 2015, but the pipelines are not completed in either country yet.

Iran is also looking for a contractor to resume building the Iran LNG project, which was half complete when it was hit by western sanctions. Gazprom is one of the companies to express an interest in taking part but it said August 2 that Iran hadn’t responded to its request yet.

Tehran has invested $2.5bn in this project which is hoped will produce 10.4mn mt/yr of LNG by late 2018.

Gazprom does not need extra gas but the Russian company most likely would like to suspend the growth of Iran’s gas exports,” said Mikhail Korchemkin, head of East European Gas Analysis. There is a threat of competition facing Iranian LNG projects, not from Russia but other players in the gas market although Iran’s LNG would have one of the world’s lowest feedstock prices.

Iran and Turkmenistan have also expanded their gas deals. Last year, Turkmenistan doubled deliveries to Iran to above 9bn m³/yr. Iran said June 27 that it will import gas worth $30bn from Turkmenistan over the next ten years and export engineering goods and services to Turkmenistan to an equivalent value.

TAP in progress

Turkmen gas is recognized as a potential source for feeding the Southern Gas Corridor (SGC), aimed to deliver 16bn m³/d of Azerbaijani gas to Turkey and EU by 2021. The volume would increase to 25bn m³/yr by 2025 and 31bn m³/yr in early 2030s.

The part from Azerbaijan to west Turkey is being built, while the European part of the SGC, Trans Adriatic Pipelinem (TAP), is being progressed. TAP said July 29 that 14,000 pipes have already been delivered to Greece and Albania for it. This amount accounts for about 30% of all pipes that will be used for the pipeline.

The 870-km TAP will be connected to the Trans Anatolian Pipeline (Tanap) on the Turkish-Greek border, run through Greece, Albania and the Adriatic Sea, before coming ashore in southern Italy. The Initial capacity will be 10bn m³/yr in 2021. The European Bank for Reconstruction and Development (EBRD) confirmed earlier that it started talks to provide direct financing of €500mn and attract €1bn from banks.

The current cost of the SGC from the Shah Deniz 2 reservoir to landfall in southern Italy, is now estimated at around $40bn, comprising $9.3bn for Tanap, $6bn for TAP and $23.8bn for developing SD2 as well as the expansion of the South Caucasus line (SCPX).

October 14, 2015

by AEA in News

Natural gas from “Shah Deniz 2” has already been distributed among 8 countries

Baku, October 14,

“Natural gas to be produced from “Shah Deniz 2″ till 2044, has already been distributed among companies from 8 countries on the basis of a contract signed for a period of 25 years”, said Deputy Energy Minister of Azerbaijan Natig Abbasov in an interview to Russia’s “news.rambler.ru” website.

Russia’s “news.rambler.ru” website distorted the words of Natig Abbasov and submitted as “Azerbaijan has already sold the gas to be produced and supplied for export till 2040”.

In response to the question “If Turkey refuses Russian gas, is it possible to compensate it with Azerbaijan gas?, the Deputy Minister answered that, natural gas to be produced from “Shah Deniz 2” till 2044, has already been distributed among companies from 8 countries on the basis of a contract signed for a period of 25 years. According to these agreements, some 16 billion cubic meters of gas have been also distributed – 10 billion cubic meters will be exported to Europe and the remaining 6 billion cubic meters – to Turkey.

Stressing that, each year, the country’s energy balance is identified considering to the electricity, oil and gas demand, increasing the number of consumers and development of industry, Abbasov said that, in addition to the future ensuring of this demand, if the gas will be produced, it may be possible to export.

The 1,850 km-length TANAP project, will pump gas from the vast Azerbaijani Shah Deniz 2 field to Turkish and European Union consumers. TANAP will run from the Turkish border with Georgia, beginning in the Turkish village of Türkgözü in the Posof district of Ardahan, will run through 21 provinces until it ends at the Greek border in the İpsala district of Edirne. The pipeline is planned to be commissioned in 2018. As it was stated earlier, some 6 billion cubic meters of gas of 16 billion cubic meters will go to Turkey, while some 10 billion cubic meters of gas will go to Europe. By 2023, TANAP’s capacity will rise to 23 bcm per year and then to 31 bcm by 2026. Initially, Turkey will buy the first 6 billion cubic meters (bcm) per year of gas from TANAP. A further 10 bcm will be delivered to Europe once it is connected to the Trans-Adriatic Pipeline (TAP) by 2020.

In 2020, TANAP line will start delivering natural gas which it will buy through the South Caucasus Pipeline by connecting Trans-Adriatic Pipeline (TAP) to Europe through Greece, Albania, and Italy.

The TANAP Project’s shareholding percentages will be as follows, after the process of acquisition of shares is completed: Southern Gas Corridor Closed Joint Stock Company (SGC) – 58 percent, BOTAS – 30 percent, and BP – 12 percent.