Late final month Moscow stopped gasoline exports to 2 “unfriendly nations” that refused to be bullied into paying with rubles: Bulgaria and Poland.
The Balkans at the moment are in search of different suppliers. Excessive on the shortlist is Azerbaijan. However can the Caucasus nation ship, and when?
Bulgaria says it doesn’t count on shortages. Earlier than Russia invaded Ukraine and despatched Europe’s vitality markets right into a tizzy, Sofia had signed a deal to import 1 billion cubic meters (bcm) per 12 months of Azerbaijani gasoline by the Southern Fuel Hall (SGC), a community of pipelines crossing Turkey, and in addition through Greece by an current pipeline in addition to a second new connection because of be accomplished later this 12 months.
Serbia too is anticipating Azerbaijani gasoline to assist exchange Russian imports, nevertheless it must wait. These deliveries will arrive by Bulgaria through an EU-funded connection agreed upon in 2018; building lastly started earlier this 12 months and it’s slated to be completed by October 2023.
Fuel demand in each nations is comparatively low: between 3-3.5 bcm/12 months in Bulgaria and round 2.7 bcm/12 months in Serbia. However at present, Azerbaijan can solely ship a most of 10 bcm/12 months to the Balkans by the SGC, which is already working at capability. Many of the quantity of the SGC, which continues by Greece to Albania and throughout the Adriatic, is earmarked for Italy and Central Europe, which may even be in search of new provides if Moscow acts on its threats to shut the faucets.
The Southern Fuel Hall consists of three sequential pipelines. (Wikimedia Commons)
A few of this budding demand could possibly be met by liquefied pure gasoline (LNG) delivered by ship, however clearly not everybody will be capable to get all of the gasoline they want.
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One short-term choice for reinforcing Azerbaijan’s exports is into consideration, although the potential improve is small: SGC-shareholder BP instructed Eurasianet that research are underway on how you can “optimize” the SGC pipeline system so as to add 1 bcm/12 months of capability.
For Azerbaijan to start to satisfy the sudden demand, it’ll require the varied consortia that personal Azerbaijan’s Caspian fields, in addition to the three pipelines that collectively type the SGC, to make the billions in investments wanted to each increase manufacturing and improve pipeline capability.
In keeping with Azerbaijan’s state oil and gasoline firm SOCAR – a shareholder in all Azerbaijan’s manufacturing fields and the SGC – a call on doubling the export capability of the westernmost part of the SGC to twenty bcm/12 months is predicted this 12 months.
It’s unclear the place the additional gasoline will come from.
BP has lengthy cautioned that expanded manufacturing at its Shah Deniz area, which at present produces all of Azerbaijan’s gasoline for exports, wouldn’t fill new SGC capability.
Extra vital in response to BP are untapped reserves across the Azeri-Chirag-Guneshli (ACG) oil area, which BP operates and which produces the majority of Azerbaijan’s oil exports. Beneath the prevailing manufacturing settlement with Baku, any gasoline from the sector is both pumped again in to spice up oil manufacturing or handed over to SOCAR freed from cost, to provide Azerbaijani shoppers.
Growing ACG’s gasoline potential would require main funding by the consortium which owns the sector, which might in flip require the manufacturing settlement to be modified.
Even in a best-case situation, it will take a number of years to start producing – and thus be of little use within the present Russia-inspired gasoline disaster.
A less expensive choice
There may be one different choice that trade analysts are watching, one that doesn’t require any new infrastructure.
Azerbaijan final December concluded a gasoline swap settlement with Turkmenistan. Beneath this plan, the Central Asian nation has begun sending as much as 2 bcm/12 months of gasoline to northeast Iran. Iran sends an equal amount from its northwest to Azerbaijan, enabling Baku to satisfy its personal rising home demand.
That swap deal could possibly be expanded to as a lot as 6 bcm/12 months and the additional gasoline transited to Turkey and on to Europe, stated John Roberts, an vitality analyst on the Atlantic Council.
“Turkey’s current gasoline transit community has round 4-5 bcm/12 months of spare capability, which could possibly be used to transit further gasoline to Europe,” Roberts defined.
Whereas not an enormous quantity, that would meet demand in some Balkan states. Most significantly, it’s technically easy and doubtlessly fast.
Along with extra capability, Turkey’s gasoline grid additionally boasts two separate export pipelines – one to Bulgaria and a bigger capability line to Greece. Not like the Southern Fuel Hall strains, that are working at full capability and must be expanded, these two have room to spare.
The road to Bulgaria may solely be utilized in summer time when Turkish gasoline demand is low, defined Arif Aktürk, the previous head of gasoline buying at BOTA?, Turkey’s state-owned pipeline operator. However the line to Greece “has loads of spare capability and could possibly be used year-round,” Aktürk stated, including that the gasoline may then movement from Greece on to the Balkans.
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