Turkish Minister of Energy and Natural Resources Alparslan Bayraktar delivered important messages regarding regional energy security at the 31st Baku Energy Forum held in Baku. The minister stated that the time has come to transport Turkmen gas through Azerbaijan to Turkey and Europe.
"All our colleagues are very closely interested in this issue. We are at a time when everyone will say 'yes' to this project," the minister added.
But does Azerbaijan have enough infrastructure for this? How will this transit affect our country, which exports gas to Europe?
Ilham Shaban, head of the Oil Research Center, told Modern.az that importing Turkmen gas and becoming an energy hub has been Turkey's 30-year dream, and this could bring significant economic benefits:
"The Azerbaijani side has always stated that it supports this project, but is not a direct participant. For this project to materialize, there must be a commercial agreement between the seller and the buyer of gas. Currently, neither Turkmenistan officially says 'I want to export gas to the west' nor is there a specific company in Europe that declares it will buy this volume of gas. The current statements are merely political. It is too early to discuss infrastructure issues until an official memorandum is signed between the companies."
The expert reminded that last year, "Turkmengaz"'s promises regarding gas supply via Iran also did not materialize due to tensions in the region. That is, desire is one thing, reality is another.
On the other hand, the impact of this project on Azerbaijan's position in the gas market, if it materializes, is also in focus. Official Baku currently exports gas to European countries and is one of the main participants in the market. The question arises whether the transportation of Turkmen gas to Europe via Azerbaijan will create a competitor for our country.
An expert in the oil and gas sector stated that whether you sell gas or tomatoes and potatoes, the laws of marketing are the same. If a large volume of the same product enters a market, prices in that market will definitely fall:
"If Turkmen gas enters Europe in large volumes through our pipelines, prices in the markets where we sell gas could fall by 15-20%. Of course, everything depends on the volume. If we are talking about 2-3 billion cubic meters of gas to be brought through small inter-field pipelines, this will not affect the price.
On the other hand, European buyers have so far only used the Turkmen gas factor as a marketing move, a pressure tool to lower the price of gas they bought from other countries, for example, Russia. Azerbaijan, in the last 19 years, has proven itself as a reliable, stable, and honest partner in a giant 'mega market' like Europe, not using gas as a political tool. We did not stay out of the market like Iran or Russia; on the contrary, with smart policies, sometimes selling below market price when necessary, we built long-term relationships with our customers."
I. Shaban concluded by noting that it is not possible to earn large sums of money by simply being a transit country:
"There is no other country in the world that has become rich by not engaging in production and trade, but simply by passing something through its backyard. The maximum profit from gas transit in world practice is approximately 5% of the total volume, and a maximum of 15%. For example, we pay Georgia approximately 5% in kind for the transit of our gas, and Turkey in cash. Yes, cargo volumes have increased, but transit is such that if it brought billions to the countries that open and close its tap, no one in the world would engage in production. Everyone would just sit and wait for buses to pass, like roadside restaurants in Kurdamir, they wouldn't grow cotton, they wouldn't create production. There is no need to fall into illusions."
Tohfa Samad
