The Author

Ilgar Gurbanov

Ilgar Gurbanov is a Baku-based researcher covering the EU-Azerbaijan relations, Energy Security and Defence issues. He is also a Deputy Editor-in-Chief for "Caucasus International" Journal. Gurbanov is an MA graduate from the College of Europe (Belgium).

DISCLAIMER
All opinions in this column reflect view of the autor(s), not of Vocal Europe.

On February 6 and March 15, the European Investment Bank (EIB) allocated the biggest package of loan of € 1.5 billion (bn) and € 932 million (mm) respectively to complete the construction of the Trans-Adriatic Pipeline (TAP) and the Trans-Anatolian Pipeline (TANAP).

Both are main segments of the Southern Gas Corridor. According to EIB Vice President Andrew McDowell “the TAP project would help to offset declining European production, providing a diversified source of gas and displace coal-fired power generation in central and southeastern Europe”.

European Bank of Reconstruction and Development (EBRD) is another institution planning to allocate loans worth up to €1.2 billion for the TAP for the TAP, after bank’s relevant decision in October 2017 on allocation of $500 mm for TANAP. Earlier, World BankMultilateral Investment Guarantee Agency and Asian Infrastructure Investment Bank had committed to a loan package for TANAP in the amount of 800 mm, 750 mm, and 600 mm US dollars respectively; the Asian Development Bank – $1 bn to the Shah-Deniz-II (SDII) offshore gas field.

The Southern Gas Corridor (SGC) which will transport Azerbaijani gas from Shah-Deniz-II (SDII) offshore gas field through the South Caucasus Pipeline’s expansion (SCPx) traversing through Georgia, then through TANAP via Turkey; and through TAP via Greece, Albania to Italy. The SGC – largest infrastructure project in Eurasia – is currently rooting to the final completion in a professional manner.

These decisions were adopted notwithstanding the continuous smear campaigns and pressures from the NGOs and political parties in Europe towards the EU institutions in order to hamper the implementation of the SGC. Earlier, certain advocacy groups had been campaigning to pluck the financing of the international financial institutions for the SGC for the purpose of political pressure over Azerbaijani government.

The campaigns targeted Azerbaijan could not break down the determination of Azerbaijan’s current leadership in realization of the SGC. Allocation of such huge amount of financing for the SGC prior to the inauguration of TANAP (in June) and ahead of presidential elections in Azerbaijan (in April), is, on the other hand, a sign of confidence from the EU towards Azerbaijan’s stable political and economic system ruled by President Ilham Aliyev.

While Azerbaijan’s historical achievements of oil policy were associated with the name of then/late president of Azerbaijan Haydar Aliyev, the country’s successful gas policy is administered under the presidency of incumbent Ilham Aliyev. President Ilham Aliyev, who has previously acted as vice-president of the State Oil Company of Azerbaijani Republic (SOCAR), principally involved in the implementation of Azerbaijan’s gas policy and made a much personal contribution to the SGC’s realization.

In order to ensure the delivery of Azerbaijani gas to the European markets, President Aliyev signed a decree in October, 2013, establishing a State Commission with the purpose of ensuring state control over and providing state support in regard to the effective implementation of the development of SDII field, the SCPx, and construction of TANAP and TAP projects. Afterwards, the head of state signed another decree dated February 25, 2014, on the establishment of “Southern Gas Corridor” CJSC with the purpose of consolidating, managing and financing the state’s interests in the SGC’s segments (Shah-Deniz II, SCPx, TANAP, and TAP).

Aliyev’s most portentous contribution to the SGC was the launch of the TANAP project. Since the Nabucco project was failed due to lack of political support and coordination among the energy companies involved, the formation of TANAP saved the SGC from being totally collapsed; though it shortened the Nabucco to Nabucco-West, latter pipeline did not succeed as well. TANAP project facilitated the investment decisions for the Shah-Deniz-II field and the decision for selection of TAP as a continuation of SGC’s European leg.

In 2015, President Aliyev initiated the creation of the Southern Gas Corridor Advisory Council in order to maximize the coordination among the foreign stakeholders and companies involved in the SGC’s implementation. The European Commission then immediately supported Aliyev’s initiative, including the organization of the meetings of SGC Advisory Council in Azerbaijan. Currently, Azerbaijan one of the main stakeholders controlling the SGC realization process. The SGC Advisory Council is an excellent functioned mechanism that justified itself in keeping the SGC countries in a constant coordination with one another in order to find out any problem at the initial stage and solve them.

President Aliyev during the SGC Advisory Council in February 2018, stated that “the SGC is a project of energy cooperation and shows how cooperation should be”. He stressed that the SGC will lead to billions of investments in all involved countries, which means thousands of new jobs, the creation of new transport infrastructure, the gasification of the countries located along the route. The SGC will serve to millions of consumers.

The project will contribute to the Georgian and Turkish economies as well, because both countries are transit venues and will receive significant revenues from the commissioning of the SGC’s gas flow. The SGC involved itself seven countries including Azerbaijan, Georgia, Turkey, Bulgaria, Greece, Albania and Italy and potentially three Balkan countries may also join the project in the years to come.

According to Federica Mogherini, EU High Representative, the “The Southern Gas Corridor is more than energy diversification and EU energy security”, because “it is also about enlarging and deepening political, economic and social ties with a number of partners in a wider region”. Azerbaijan’s EU Ambassador Fuad Isgandarov stated that “Southern Gas Corridor project” is “a very strong basis for exceptional political dialogue” between the EU and Azerbaijan.

With further Azerbaijan’s new gas fields become functional, the SGC’s operational value and sustainability will be boosted as well. President Ilham Aliyev, after the SGC’s recent Advisory Council meeting, tweeted that “Azerbaijan’s proven gas reserves are two times more than Shah-Deniz field and amount to 2.6 trillion cubic meters” and “Azerbaijan actively works with its international partners on new gas fields in the Azerbaijani sector of the Caspian Sea”.

To date, the main works on the SGC’s segments – TANAP 95%, TAP 67%, SDII 99% and SCP’s expansion 95% – are completed. The SGC has a strategic importance for the EU’s energy security and its timely completion will contribute to the EU’s endeavours to diversify its supply routes; will help to cover Europe’s growing gas needs and decrease its strong gas reliance on other gas suppliers especially in the most vulnerable parts of Europe.

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