September 9, 2013
The Woodrow Wilson Center: Roundtable Discussion on the Southern Gas Corridor
On September 9th, the Woodrow Wilson Center assembled a panel of experts to review and discuss the recent energy developments in the Southern Gas Corridor, an initiative of the European Union to connect Europe to oil and gas fields on the Caspian Sea. Almost three months ago, on June 28, the Shah Deniz Consortium, a body overseeing Azerbaijan’s largest natural gas field, decided it would use the Trans-Adriatic Pipeline (TAP) to move its oil and gasses west and open their reserves to European markets. TAP, which will stretch from Azerbaijan, through Georgia, Turkey, Greece, Albania, and finally to Italy, will bolster Europe’s energy security, as it will diversify Europe’s energy supplies, alleviate Europe’s dependence on Russian oil and gas, and will strengthen Azerbaijan’s own economy and make it a global force in energy production.
The first member of the panel to speak was Amos Hochstein, Deputy Assistant Secretary for Energy Diplomacy at the Department of State. Amos focused on explaining the positive outcomes that the construction of TAP will bring but also emphasized that it will not give the EU complete energy security; it is estimated to bring in 10 billion cubic meters of natural gas annually, covering roughly 2% of all European demand for 2018. Amos however did stress the importance of the pipeline by emphasizing the security generated by bringing greater diversity to the EU’s energy supply, which will be able to tap energy sources in North Africa, Russia, and now Azerbaijan. In generating greater energy security and economic drive the EU and Azerbaijan are not only helping each other, they are also acting in the interests of the U.S., whose global policies are greatly aided by a strong and stable EU. Amos concluded by suggesting that, as natural gas markets begin to develop throughout the world, decisions in energy security are going to become inter connected, leading to potential for greater international cooperation and opportunity.
Greg Saunders, Director of International Affairs at BP, followed up Amos’ remarks by detailing the process and costs of building the new TAP line and giving details on the global natural gas market. Though projects like TAP are extremely expensive, usually costing tens of billions of dollars, there is a growing need to open new energy supply lines to meet growing global demands. Officials could’ve elected to go with a cheaper means of transporting fuel, using already constructed pipelines through Eastern Europe and Russia, but that would only be a short-term victory and simply delay larger obstacles. According to BP estimates global energy demand will increase 40% by 2030, which, as Saunders pointed out, is the equivalent of adding another United States and China to our current global consumption levels. Renewable energy sources are not developed enough to support this massive increase in energy consumption and we must continue to invest in fossil fuels, of which natural gas is the most abundant and easily extracted. The approval of the TAP pipeline will provide Turkey and Southern Europe with a reliable supply of energy while also opening up the possibility for exportations to more markets, both in the East and West, as the Shah Deniz field is further developed.
The final two panelists were Lorenzo Galanti, Head of the Economic, Commercial and Scientific Affairs Office at the Italian Embassy, and Michael Ratner, a specialist on energy policy for the Congressional Research Service. Each reiterated the importance of creating a diverse and expansive energy network. Mr. Galanti emphasized that the new energy landscape is still undefined, major energy developments are still happening, one of the most recent being the discovery of the United State’s massive gas reserves. As more natural gas reserves are tapped the exports they generate will breed greater global interaction, coordination, and cooperation. Mr. Ratner followed up with the observation that TAP was approved solely because of its economic merits; it is by no means a deal crafted for political gain. Hopefully the approval of TAP can be set as an example for all future energy security deals so that the market may further expand and develop.