31. The Southern Gas Corridor and the New Geopolitics of Climate Change
- Author:
- Morena Skalamera
- Publication Date:
- 04-2021
- Content Type:
- Journal Article
- Journal:
- Baku Dialogues
- Institution:
- ADA University
- Abstract:
- It has been argued that the U.S. shale revolution, the Trump Administration’s energy policies, and the global shift towards low‑carbon energy sources and renewables have contributed to shape a new energy order—one that challenges the market power traditionally enjoyed by petro‑states. Nowhere are these developments more relevant than in Azerbaijan, as the country’s expensive investments in the Southern Gas Corridor come under increasing pressure. Unless Azerbaijani gas can be decarbonized at a competitive cost, it may risk becoming redundant within a couple of decades as Europe embraces a greener future. Geopolitics and Geo‑economics The Southern Gas Corridor (SGC) is a $45bn mega‑project ($25bn for the development of the Shah Deniz II field and at least $15bn for the delivery system) to supply natural gas from the Caspian Sea to Europe and, by so doing, reduce reliance on Russian imports. This is a priority that has taken on urgency in the wake of Russia’s 2014 annexation of Crimea and the sharp deterioration in relations between Moscow and Brussels that ensued. Currently, the SGC is made up of two pipelines to deliver gas from Azerbaijan’s Shah Deniz II field to Turkey and Europe—one called TANAP that is already operational and runs the length of Turkey, and another known as TAP stretching from Turkey’s border with Greece across Albania to Italy, which started pumping gas in late 2020. This is how a leading ADA University policy expert described the situation to me in October 2020, in light of technical delays in the pipeline’s inauguration and the big changes in energy markets described above: “the TAP pipeline is 90 percent completed and will be inaugurated soon. Unlike oil pipelines, whose flexible delivery to the end‑consumer can be sorted out once they are built— as oil travels via tanker, rail, etc.— gas pipelines are more rigid investment endeavors. [...] You don’t agree on a gas pipeline unless you have secured a buyer on the other end.” While natural gas supplies from Azerbaijan’s Shah Deniz field are already contracted, the project has seen numerus twists and turns since it was signed with great fanfare at the end of 2013. The SGC is an expensive endeavor and the institutions that lined up to finance it are a testament to the degree of strategic importance it carries for the EU. The project has, indeed, been designated as one of the EU’s “priority projects.”
- Topic:
- Climate Change, Energy Policy, Environment, Natural Resources, and Gas
- Political Geography:
- Europe, Asia, and Azerbaijan