Let’s not exaggerate – Southern Gas Corridor prospects to 2030

A new round of political activity to promote the Southern Gas Corridor from the Caspian to Europe has begun. In February, European energy ministers and supplier nation officials met in Baku. In June, first gas entered the Trans Anatolian Pipeline (TANAP) across Turkey, and the first substantial source of supply for the Southern Corridor, the Shah Deniz II project in Azerbaijan, started producing. Shah Deniz II will ramp up to peak output of 16 bcm/year by 2021-22. Europe will then receive around 10 bcm, no more than 2 per cent of its overall demand, via the Southern Corridor, compared to the 10-20 per cent that had been envisaged in Brussels. While political leaders continue to paint the corridor’s prospects in very bright colours, the market dynamics – in the Caspian region itself, in the Caucasus and Turkey, and in Europe – are less promising. Commercial conditions for the Southern Corridor’s success have deteriorated as political support for it has grown. This paper argues that, up to 2030, the corridor will most likely remain an insubstantial contributor to Europe’s gas balance. At best, there may be sufficient gas for a second string of TANAP, but only at the end of the 2020s. The paper considers the potential sources of supply for the Southern Corridor (Azerbaijan, Turkmenistan, and others including Iran, Kurdistan, and the East Mediterranean); demand and transport issues; and the conditions under which Southern Corridor gas will compete with other supply in the European market.

By: Simon Pirani

Latest Tweets from @OxfordEnergy

  • Malcolm Keay on the drive towards decarbonisation and how it completely upturned the power sector, ending old divid… https://t.co/KVkAbCPaVT

    October 22nd

  • OIES's @katyafimava tells @energyinsider that the #EC proposal to amend the Third Gas Directive would undermine the… https://t.co/MC4JhVxBGO

    October 22nd

  • The Evolution and Prospects of Saudi Arabia – Russia Oil Relations: A Saudi Perspective https://t.co/Bp0Nmh5yxP

    October 22nd

Sign up for our Newsletter

Register your email address here and we will send you notification of new publications, comment, articles etc. automatically.