Third energy package and Trans-Caspian gas pipeline: Time for compromise

Thus far, the Southern Gas Corridor has not caused any disagreements between Russia and the EU, except for the Trans-Caspian gas pipeline construction project. Therefore, it would be appropriate to assume that it is this question that appears in regular negotiations of the parties about the prospects of energy cooperation, and it looks as though this part of the Southern Corridor was the subject of conversation between the Minister of Energy of Russia and the EU Commissioner for Energy, when, in December last year, both sides discussed application of provisions of the Third Energy Package for Gazprom (in particular, for the South Stream project). Then, in an interview after talks Minister Shmatko promised that all controversial issues, in particular, the Third Energy Project and the European Commission's "Southern Corridor" project, the sides one way or another would agree. This year debate of EU-Russia energy cooperation continued, but no final decision has been made.

In the event of a compromise, Gazprom receives the entire supply chain for its gas that fully meets the commercial interests of the company. The Russian side has repeatedly stressed that is not going to use gas as a bludgeon for a variety of contentious issues, including
political, which may in future arise between Russia and Europe. The EU, in turn, gets a new long-term and stable source of supplies in the form of the Turkmen gas via alternative (Russian) route, which in part will guarantee competitive prices for European consumers of gas and strengthen the energy security of the EU as a whole.

Perhaps all is not the case, how could it be, and both sides for whatever reason will to the end take an uncompromising stance in the issue of withdrawal of the South Stream from the rules of the Third Energy Package, as well as on the construction of Trans-Caspian pipeline, finding that such an exchange is of unequal value? Maybe any more bets are at stake, or even very different rates? One is obvious; compromise would have advanced all far ahead.

Turkmen gas will sooner or later have to find additional export niches in addition to existing ones, taking into account its large quantities. Russia itself is a manufacturer and exporter of natural gas number one in Europe and the European Commissioner Oettinger at the very last year's December meeting stressed Russia's this role in Europe. Therefore, Russia has no reason to take a position "dog in the manger" for Turkmen gas. The implementation of TAPI (Turkmenistan-Afghanistan-Pakistan-India), despite all good intentions, it is extremely problematic because of the factors that have repeatedly been analyzed and described in the press. There is an alternative - China will start construction of the third, fourth and so on, threads of the Turkmenistan-China gas pipeline, and eventually the lion's share of Turkmen gas will go to the Celestial Empire for a favorable price for China, which will ultimately deprive Russia of the largest gas market.

The EU and Russia, as large, self-respecting international players, will sooner or later reach an agreement on these issues as Russian Energy Minister Sergei Shmatko promised.

The Third EU Energy Package, adopted in 2009, includes six legislative acts envisaging the restrictions on the activity of vertically integrated companies in the energy sector. The main requirement of the document is to separate the business of producing and transporting energy resources through the third parties' access to the gas transportation infrastructure. Russia's Gazprom said that these provisions are directed against it as a major supplier of pipeline gas to Europe.

Trans-Caspian gas pipeline project is one of important elements of the Southern Gas Corridor and envisages Turkmen gas for further delivery to European markets. It involves laying a 300 km pipeline through the Caspian Sea bed from Turkmenistan to Azerbaijan. The European Commission approved the mandate for holding the negotiations with Turkmenistan and Azerbaijan over the gas pipeline in September 2011. Turkmenistan plays a role of a supplier in the project, Azerbaijan - a transit country. Russia opposes the project implementation, citing the unresolved status of the Caspian Sea, and environmental risks as the arguments.

TAPI gas pipeline project envisages gas transportation from the richest fields in eastern Turkmenistan to India via Afghanistan and Pakistan. The total length of the gas pipeline is 1,700 km, the design capacity - 33 billion cubic meters. The project cost hits up to $7.8 billion. The main challenge to the project implementation is to ensure the safety of construction and further transit through the territory of Afghanistan and partially Pakistan.


Azer Ahmedbeyli /Trend/