Will the hopes of Ukraine for gas from Azerbaijan come true?

Poroshenko, sharply opposed to the new Russian gas pipelines, actively supports other foreign projects of this kind. And now he suddenly became a participant in the launch of the Trans-Anatolian gas pipeline in Turkey. For what purpose did the Ukrainian president fly to this event and will he be able to achieve his dreams?
At the inauguration ceremony of the Transanatolian gas pipeline (TANAP), Ukrainian President Petro Poroshenko was in Turkey. At the same time, officially, Ukraine has nothing to do with this project. However, Kiev could not but support the gas pipeline project, which bypasses Russia and will compete with the Russian “Turkish stream”.
Poroshenko’s press service said on Tuesday that it was the President of Azerbaijan, Ilham Aliyev, who invited Kiev to take part in the Southern Gas Corridor (SGC) project. It is not reported about the format of cooperation between the two countries.
However, Poroshenko outlined his wishes. “We will be happy to diversify our energy sources and receive gas supplies from TANAP through Bulgaria and Romania,” Poroshenko said. According to the President of Ukraine, Kiev is grateful for the opportunity to receive gas from Turkey and Azerbaijan. “In the future, we will be able to find an opportunity to attract more natural gas from Azerbaijan, from the Caspian region, not only to the country, but also to the whole region connected with Ukraine through the Ukrainian gas transportation system,” Poroshenko dreams.
The so-called Southern Gas Corridor consists of three gas pipelines: the South Caucasus from Azerbaijan, the Trans-Anatolian (TANAP) through Georgia to Turkey, and the Trans Adriatic (TAP) from Turkey to Europe. Gas for all these pipes will come from the Azerbaijani Shah-Deniz-2 field on the Caspian shelf. We note that Poroshenko seeks to diversify gas supplies to Ukraine, but categorically against Russia doing the same, namely, diversifying the way of gas supply to Europe (this is the Nord Stream-2 gas pipeline).
Will Poroshenko’s dream of “diversifying energy sources” come true? And will Azerbaijan have gas for Ukraine?
The main problem of Azerbaijan is precisely in the absence of gas, says Igor Yushkov, a leading expert of the National Energy Security Fund. The Shah-Deniz-2 field is designed to fulfill previously signed long-term contracts for the supply of 16 billion cubic meters for the Southern Gas Corridor for Turkey (6 billion cubic meters), Greece, Bulgaria (1 billion cubic meters) and Italy (8 billion cubic meters). It is no longer possible to refuse these obligations.
“But in other fields of Azerbaijan there was a decrease in extraction. As a result, there is a shortage of gas in the country, and it is growing. That’s where Azerbaijan got into such a trap, “Yushkov said. Baku even had to turn to Moscow for help. In November 2017, Azerbaijan signed a contract with Gazprom. In November-December last year, Russia supplied 0.3 billion cubic meters, in the first quarter of 2018 – 0.8 billion cubic meters. “If the trend continues, then Gazprom will increase the volume of gas supplies to Azerbaijan, and from Shah Deniz Azerbaijani gas will be exported. Formally, we can say that Russian gas will also be exported, “says the expert.
What is the conclusion from this for Kiev?
First, Azerbaijan does not have additional gas for Ukraine. Secondly, even if Baku agrees to sell gas to Kiev, it will go, in fact, about the supply of Russian gas. It will simply make a huge detour – it will go through Georgia, Turkey and will come to the southern part of Ukraine along the Transbalkan gas pipeline in the reverse mode.
And, of course, in any case, this gas will be more expensive than if Kiev bought it directly from Gazprom. “There is a too large transport chain. A longer delivery route alone will lead to higher gas prices, “Yushkov said.
The price of Azerbaijani gas for Europe is still unknown, and it may even be higher than the Russian supply. The main competition between Azerbaijani and Russian fuel will unfold in the Turkish and Italian markets. Gazprom delivered 29 billion cubic meters to Turkey in 2017, Azerbaijan will supply only 6 billion cubic meters. If demand for fuel in Turkey continues to grow, then Gazprom will not even notice the appearance of Azerbaijani gas on the market. Volumes will not decrease, Gazprom’s supply growth rates may only slow down.
The list of those wishing to become part of the “Southern Gas Corridor” by one Ukraine does not end. Iran and Turkmenistan have long wanted to join the project. Only they, unlike Ukraine, do not want to import foreign gas, but sell their own to Europe.
Fortunately, both of these countries are among the largest in terms of gas reserves. In Iran, the proven reserves of gas are about 34 trillion cubic meters, in Turkmenistan – about 10 trillion cubic meters. It is not a match for Azerbaijan with its reserves of only 1.2 trillion cubic meters in Shah Deniz.
However, Ukraine’s dreams are broken about reality in this case too. Iran’s deposits need to be invested, and because of the worsening around the Iranian nuclear program and the new US sanctions, this is extremely difficult. In addition, the cost price of Iranian gas is quite high. Turkmenistan has similar problems: it can not reach the gas pipeline through the Caspian, whose legal status has not been resolved. Also, Turkmenistan now does not have free gas for export, it needs investments in the development of new fields. There are chances of Iran and Turkmenistan to join the “Southern Gas Corridor” in theory, but in the very distant future – at least ten years, or even more.

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