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What should Azerbaijan expect from Europe-Russia gas war?

Difficult political situation and the need to accelerate the term of implementation of the projects made the players of the European gas market intensify their efforts, and in fact opened a new stage of confrontation between them.

We’re currently not speaking about Azerbaijani gas, the delivery project of which goes as scheduled. This is facilitated by the fact that the choice of routes and contractors, negotiations with the EU, preparation of documents has been completed a long time ago.
Today, the players that understood the effectiveness of the southern direction of gas supplies to Europe, previously selected by Azerbaijan, have become active. And not just arguments are used, but basically ultimatums.

On Jan.14, a meeting of the head of Gazprom Alexey Miller with the vice-president of the European Commission for Energy Union Maros Sefcovic took place. At this meeting, Miller in the form of ultimatum actually stated about the only route of Russian gas supply to Europe through Turkey, due to the difficult situation in Ukraine.

Miller said that the Turkish Stream pipeline is the only route, by which 63 billion cubic meters of Russian gas can be delivered, which go en route through Ukraine for now, according to RIA Novosti news agency.

“There are no other options,” the head of Gazprom said. “Our European partners are informed about it and now their task is to create the necessary gas transportation infrastructure from the border of Turkey and Greece.”

That means, today, Moscow actually puts before Europe a task on creation of an infrastructure necessary for the supplies of Russian gas.

Sefcovic himself has already parried this statement, who characterized the proposal of Miller for the supply of Russian gas through Turkey as the one which strikes a blow to the image of Gazprom as a reliable supplier.

That is, in fact, this round of talks on Russian gas supplies to Europe can be called a failed one. How can this be explained?

First, Europe and Russia still have a number of, thus frar, irresistible contradictions. Brussels can not refuse from supporting Ukraine – something it will have to do if it accepts Gazprom’s proposal.
Second, today, gas is actually one of the most effective pressure tools of Moscow’s on Europe. However, both sides understand simple truth: Russia has gas and Europe wants to buy it.
What currently goes on is bargaining for better terms. EU vice president confirms this, saying that the option of gas supply via Turkey will unlikely to work. But the EU is ready to consider Russia’s proposal to supply 50-60 billion cubic meters of gas through the new pipeline.

What will Azerbaijan get in this case? First of all, this can affect the cost of gas. Of course, the long-term gas supply contracts and “take or pay” conditions significantly reduce the risk of competition on certain markets.

However, the expansion of gas supply in the long term through increasing of the production volumes in Azerbaijan or joining of the manufacturers from the eastern coast of the Caspian Sea to the Southern Gas Corridor, may have problems with oversaturation of the market in Southern and Eastern Europe.

Bulgaria’s recent proposals for the construction of a gas hub in this country to provide all the regional countries, namely, Serbia, Macedonia, Greece, Croatia, Slovenia, Austria and Hungary with fuel, testify to this.

The hub construction project has been already worked out, Bulgarian Prime Minister Boyko Borisov said. If Russia is interested in it, Bulgaria is ready to start negotiating.

Today it is unequivocally clear that Azerbaijan is beyond competition in the beginning of supplies to the European market. However, tough competition can be observed on the European market in the long term. It is necessary to prepare for it now.