BAKU, Azerbaijan, Nov.28. When looking at the domestic/national gas production of Azerbaijan, and its future potential, there is a straight forward need to invest much more, Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY, and Global Head Strategy Risk at Berry Commodities told Trend.
“Without additional investments in upstream, the current extra demand of the Europeans will not be able to be met. Azerbaijan should also be addressing the need to set up expansion of its natural gas pipeline networks to EU, either via the normal channels, but maybe address the potential of setting up LNG export terminals in some 3rd party countries with open access to Mediterranean. The latter is to the advantage of Azerbaijan, as it doesn’t lock in its own production in future to markets in which a preference could change. Pipelines lock not only markets but also the producer/exporter, as there is no other outlet available,” he said.
The expert pointed out that European governments are not clients, or have the authority to make a deal.
“In the European context, it is companies (private or government owned) that hold and sign contracts. So Azerbaijan should be addressing deals with companies, such as Uniper, ENI, Total, Shell or others. Long-term contracts are needed, and should be targeted by Azerbaijan. Maybe best option is to put it long-term oil price indexed, with already lower gas prices as basis than currently are in market. Current prices will be demand destruction, so not a very good strategic choice,” added Widdershoven.
The expert believes that creation of interconnectors to get access to Azerbaijani gas will be of interest, and important.
“SE-Europe is still struggling, and will be needing even more if Russian gas and LNG is out. With EU sanctions on Russian crude and products, demand will even increase more. Still, don’t overestimate demand forecasts, as others, such as Egypt, Libya, Algeria etc, also have their eyes on the same region.”
---
Follow the author on Twitter: @Lyaman_Zeyn
Front Page
Power News
Today's News
E-mail
Print
