Caspian oil and gas: High hopes for a tough neighborhood

Azerbaijan has long been seen as a strategic gateway to vast oil and gas resources in the Caspian region and a source of energy security for Europe but has yet to live up to its promise as a bulwark against the influence of Russia and OPEC in the region. Oil companies and politicians coined the term “contract of the century” to describe the 1994 deal to develop the giant oil complex Azeri-Chirag-Offshore Gunashli, which led to the construction of the BTC pipeline to the Mediterranean. Azeri crude, produced by a BP-led consortium, has lately offset Libyan shortfalls. But the BTC pipeline operates at just two-thirds of capacity as expected volumes from across the Caspian have failed to materialize. And this month’s launch of gas supplies from Azerbaijan’s Shah Deniz field to Europe via the audacious-sounding Southern Corridor may fall short of expectations. The route offers an alternative for at least one country that relies on Russia for gas: Bulgaria. But opinion varies on whether southern Europe needs extra gas; and the volume involved, at 10 Bcm/year, is barely 2% of current EU gas demand. That may disappoint those like former US diplomat Matthew Bryza who see the Southern Corridor as a… continue reading

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Source: CTRM Center

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