South Stream not a rival for SGC: expert

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    The South Stream project, even if implemented, will not become a rival for the Southern Gas Corridor (SGC), said Deputy Executive Director for Energy Studies at the Russian Institute for Energy and Finance Alexei Belogoryev.

    “The Southern Gas Corridor with its current parameters reaches Greece and Italy. It does not intersect and does not in any way compete with the South Stream, which, as expected, had to pass far to the north,” he told Trend.

    The South Stream could compete with the unimplemented Nabucco pipeline, which was supposed to run from Central Asia to the EU, according to Belogoryev.

    Out of the ongoing projects, the second phase of Russia’s Turkish Stream project may to a certain extent compete with the Southern Gas Corridor, which will supply Azerbaijani gas to the EU, as it runs along the same route and to the same market, Italy, he noted.

    “On the other hand, the volume of gas offered to Europe by Azerbaijan as part of the Southern Gas Corridor project, and by Russia as part of the Turkish Stream project, is not so large for them not to be able to fit into the European market,” he said.

    The Azerbaijani and Russian gas deliveries are more likely to compete in Southern Italy with North African and Middle Eastern gas deliveries as well as LNG cargos in terms of price, than with each other, according to Belogoryev.

    He also noted that any Russian pipeline project to supply gas to Southern and Southeast Europe will not be able to create problems for the Southern Gas Corridor, as this project was initiated earlier and is at a much more advanced implementation stage.

    “In addition, due to political reasons, the Azerbaijani gas will always be more preferable for European countries, at least in Southeast Europe and Italy, than the Russian gas, the dependence on which is perceived with certain strain,” Belogoryev said.

    Gazprom abandoned South Stream in late 2014 because the European Commission did not grant exemptions from the Third Energy Package, which, in particular, says that one gas provider should use no more than 50 percent of the pipeline capacity, and the remaining capacity should be put up for auction. Later, the project was replaced by Turkish Stream, which will pass through Turkey. Gazprom started construction of the offshore section of Turkish Stream in May 2017.

    The Southern Gas Corridor is one of the priority energy projects for the EU. It envisages the transportation of gas from the Caspian region to the European countries through Georgia and Turkey. At the initial stage, the gas to be produced as part of the Stage 2 of development of Azerbaijan’s Shah Deniz field is considered as the main source for the Southern Gas Corridor projects. Other sources can also connect to this project at a later stage.

    As part of the Shah Deniz Stage 2, the gas will be exported to Turkey and European markets by expanding the South Caucasus Pipeline and the construction of Trans Anatolian Natural Gas Pipeline and Trans Adriatic Pipeline.