Pipeline tangles

HAPPINESS is multiple pipelines, at least as far as European energy security is concerned. But keeping track of the twists and turns of the different projects that could connect Europe to the hydrocarbons of the Caspian, Central Asia and the middle east is an almost fulltime job. (As far as I can see we touched on the subject in the print edition a few months ago and looked at it in depth a year ago.). This blog will attempt regular updates of pipeline news.

A good starting point is this map above, or this videographic, compiled a year ago but still broadly accurate.

Since then, all the projects have inched forward. But it is still unclear which will actually be built. As Azerbaijan's energy minister Natiq Aliyev noted at the 2010 Mediterranean Oil and Gas Conference at the end of June, his country could supply all three planned pipelines on Europe’s Southern Corridor—the TAP (Trans Adriatic Pipeline), ITGI (Interconnector Turkey-Greece-Italy) and Nabucco

but no one can say for sure if any of them will be built

Most other sources of gas are unclear, but from 2016-2017, the second phase of the Shah Deniz field,  the largest natural gas field in Azerbaijan, will start exporting, with up to 16 billion cubic meters (bcm) of additional capacity

Of that, says Mr Aliyev, 6 bcm will be delivered to Turkey, Azerbaijan and Georgia; 10 bcm will be available for the three planned pipelines to Europe. (Nabucco proposes to buy 7 bcm, for example).

But he continued:

nobody now can answer the question what will happen in the future. Five to seven years ago everybody said Nabucco will be implemented and constructed by 2011-12. But now it’s delayed. When we speak about TAP, I don’t know when it will be in place or ITGI. Or if they will be in place; if they will be implemented in time for Azeri gas,”

Encouragingly for Europe, Mr Aliyev sounded dismissive of Gazprom's offer to buy as much Azerbaijani gas as possible at European prices

I think for a company it is not very good when they export in just one direction.

A crucial question in this is the political orientation of the transit countries. When the bull-necked Boyko Borisov became prime minister of Bulgaria last year, rejigging the country’s energy policy away from Russia was one of his top priorities. He roused Kremlin ire by renegotiating a nuclear power deal. Now he has announced that his country will most likely be pulling out of an oil pipeline that would have given Russia a “Bosphorus bypass”, from the Bulgarian port of Burgas to the Northern Greek port of Alexandroupolis. Bulgaria had earlier cited environmental concerns about the off-shore part of the pipeline.

However Bulgaria is also wobbling in another direction. 

During a visit to Sofia, Russian deputy prime minister Viktor Zubkov announced that Bulgaria would definitely take part in the Russian-backed South Stream gas pipeline, which would bring Russian and central Asian gas to Austria via Bulgaria and other Balkan countries. (map by Samuel Bailey—the Economist's cartographers had left for a well-deserved weekend before this was posted) Details are to be determined on Thursday July 16th. Mr Zubkov told reporters:

We can say that we've reached a complete understanding with the Bulgarian government and the head of the government has confirmed that Bulgaria is joining the South Stream project.

That sounds definitive. But it isn't. Similar statements have been made before. South Stream is hugely expensive. It is not clear that Russia’s ailing gas giant Gazprom has the money to build it, nor that Russia’s ill-managed gas reserves can support a new export drive. But Greece's northern neighbour (FYROM to Greeks, Macedonia to most of the rest of the world) seems to be keen too. Gazprom's Alexei Miller headed to Skopje after the Athens conference and apparently reached agreement to build a spur pipeline linking the country to South Stream.

South Stream’s rival is the Nabucco pipeline, backed by the EU and America, which aims to take gas from the Caspian and eventually Central Asian exporters, to central Europe on a different route. It is hoping to get gas not only from Azerbaijan, but also from Iraqi Kurdistan: something that has strong backing from officials there.

But South Stream and Nabucco are not the only lines on the map. The Trans-Adriatic pipeline has attracted a new investor: the German energy giant E.ON, normally a close ally of Russia's Gazprom. It says it will be taking a 15% stake in the 520km project, which runs from the Caspian to Brindisi in Italy, via Greek city of Salonica and Albania. At the Athens conference, TAP Managing Director Kjetil Tungland told the New Europe website that TAP is targeting gas from Shah Deniz Phase II.

“That is what we are targeting. And they will be offering 10 bcm on the Turkish-Greek border and we will be offering 10 bcm of capacity. Will any of these pipelines be built if they only have gas for half of the capacity? My suggestion is that they will not. So the project that will give the best offer to Shah Deniz will at least be realized first ... and we are the best position because we have the lowest cost,” 

Another rival is the IGI Poseidon pipeline, due to be completed by 2017, part of a project to carry natural gas froom Karacabey in Turkey, through Komotini in Greece and ending in Otranto in Italy.It is offering a spur pipeline to Bulgaria. Those are just a few of the projects crowding what the EU likes to call the "southern corridor". The gregarious Mr Borisov is not going to be short of visitors in the coming months and years.