Page 11 - MEOG Week 39

MEOG POLICY MEOG

Unfrozen Azerbaijan, Armenia

conflict yet to spook oil, gas markets

TURKEY THE conflict between Armenia and Azerbaijan Gas pipeline (TANAP), which forms part of the
has broken out just weeks before the latter is due Southern Gas Corridor (SGC).
to start piping gas to the European Union, but so Azerbaijan exports the vast majority of its
far oil and gas markets have not been spooked by crude oil through the Baku-Tbilisi-Ceyhan
the sudden unfreezing of one of Europe’s oldest (BTC) pipeline to an export terminal on Turkey’s
wars. Mediterranean coast. Additional volumes are
Bloomberg speculated on September 28 that pumped to the Black Sea port of Supsa in Geor-
it was perhaps because global energy demand is gia. Natural gas exports reach Turkey through
drastically down amid the prolonged coronavi- the South Caucasus pipeline to Georgia. All
rus (COVID-19) pandemic, meaning producers three of these pipelines run in parallel through
the world over have spare capacity should the Azerbaijan.
worst-case scenario arise, namely the bombing Small volumes of crude from Kazakhstan and
of an Azerbaijani pipeline and an ensuing envi- Turkmenistan on the eastern shore of the Cas-
ronmental disaster (although, buried up to two pian Sea are also pumped through the BTC pipe-
metres below the ground, the Azerbaijani pipe- line. It has a capacity of 1.2mn barrels a day, but
lines wouldn’t make easy targets). carries less than half that in practice, Bloomberg
The conflict centred on the Nagorno-Kara- said. Another 80,000 barrels a day flow to Supsa.
bakh region claimed by both countries – con- The South Caucasus Pipeline and TAP are
trolled by ethnic Armenians for the past four part of the 4,000-km SGC, which cost BP and
decades but internationally recognised as part of partners around $40bn to build. Gas deliveries
Azerbaijan – could theoretically damage export to Italy and Greece through the SGC, due to start
pipelines from the Caspian Sea region’s sec- next month, could meet around 3% of the EU’s
ond-biggest crude producer as they run within gas imports.
just 10 miles of its border with Armenia before World oil demand will be 7.1% lower this
crossing into Georgia and running on to Turkey. quarter than it was a year earlier, according to the
The newly built Trans Adriatic Pipeline International Energy Agency. Back in June, the
(TAP) will soon begin taking Azeri gas across the IEA was predicting a 4% drop in gas consump-
Adriatic to Italy from the Turkey-Greece border tion this year, twice the decline recorded during
where it connects to the Trans Anatolian Natural the 2008-09 financial crisis.™

Week 39 30•September•2020 www. NEWSBASE .com P11