Natural Gas:

Azerbaijan Ambassador Suleymanov discusses final pipeline route connecting Caspian to Europe

What impact will construction of the Trans Adriatic Pipeline, which will transport natural gas from Azerbaijan to Europe, have on political relations between Russia and Azerbaijan? During today's OnPoint, Elin Suleymanov, Azerbaijan's ambassador to the United States, discusses the pipeline's impact on competition in the natural gas sector and the region's economy.

Transcript

Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is His Excellency Elin Suleymanov, ambassador of Azerbaijan to the United States. Mr. Ambassador, thank you for joining me.

Elin Suleymanov: Thank you.

Monica Trauzzi: Mr. Ambassador, Azerbaijan is making energy news with the announcement of a final pipeline route to transport natural gas to Europe. The Trans-Adriatic Pipeline has been selected as the final project. Why as the South European route chosen, and what's your view of the final choice?

Elin Suleymanov: Thank you very much for invitation, Ms. Trauzzi. In fact, this is indeed very good news. I think what we finally have is a decision how to extend the southern gas corridor, which is a priority project for the European Union and for Europe as a whole. The decision to go with the Trans-Adriatic Pipeline came as, I think, as no surprise, because apparently, according to the Shah Deniz Consortium, it makes great economic sense, and this is a project which will bring finally Azerbaijani gas from the Shah Deniz Field to European consumers, and specifically to E.U., to Greece and Italy. Now that decision by itself does not mean that other countries along the route will be devoid of Azerbaijani gas. So even now, we are talking about interconnectors, possibly in the future to Bulgaria, possibly to Romania and other nations, which will accommodate greater amounts and volumes of Azerbaijani gas coming in. In general, what we have, though, is truly a major contribution from Caspian region to energy security of Europe. It's a long-awaited decision.

Monica Trauzzi: And following the announcement, the U.S. State Department released a statement saying that bringing Caspian gas to international markets will contribute to meeting global energy demand, which is critical to sustaining economic growth. So you really feel that you're going to be playing a major role in the broader context here?

Elin Suleymanov: We hope so. We appreciate the U.S. statement, first of all, and we appreciate the U.S. support throughout, over the two decades we've been working with our partners on developing the Caspian energy resources, be it oil through Baku-Tbilisi-Ceyhan Pipeline, and now to gas in the southern corridor, and now it goes through Trans-Anatolian Pipeline, turn up and goes through Trans-Adriatic Pipeline. I think we will be contributing to the welfare and prosperity of greater Europe. Consider this. This is one of the first significant good news for instance Greek economy. If you look at Greece today, it will be major investment in Greece, A, and B, it will create jobs, and long-term sustainable growth in Greece, plus contributing to energy security of Greece.

Monica Trauzzi: But what timeline are we talking about for the construction of the pipeline? I mean, how soon could we see those jobs?

Elin Suleymanov: We're looking at, I understand that the pipeline itself, the gas will be delivered by about 2018, 2019.

Monica Trauzzi: OK.

Elin Suleymanov: So we're looking at that frame. But of course, the feasibility studies, the contracts, the preliminary construction, will all go on in the meantime.

Monica Trauzzi: Ambassador Morningstar, the U.S. ambassador to your country, has been a major supporter of the project. What impact do you think this has on your country's relationship with the United States?

Elin Suleymanov: I think that's just another validation and a proof of the very beneficial, mutually beneficial partnership between the United States and Azerbaijan. We've been working together for a long time, and that shows what we can do together. That's a good thing.

Monica Trauzzi: Russia remains the main player in the region ...

Elin Suleymanov: Yes.

Monica Trauzzi: ... on natural gas. What is the political dynamic between your two countries?

Elin Suleymanov: We have had even working relation with our Russian neighbors, and we're developing relationship which should be beneficial for the region. We do not come as direct competitors of, to the Russian production of gas, because as you understand, Russia has significant volumes. However, we would like to play in a competitive, open market, and what we believe, that Azerbaijan's contribution to the market will be good for the energy security and competition, and at the end of the day, it's good for Russia as well.

Monica Trauzzi: What influence does Russia currently have on the natural gas market and natural gas pricing?

Elin Suleymanov: Russia is significantly in the East European and European market. As a whole, I believe it's about a quarter of the market is delivered by the Russian monopoly Gazprom.

Monica Trauzzi: And do you think that, how critically are they at influencing the price, and how might you be able to influence that once you have your natural gas on the market?

Elin Suleymanov: The prices are changing. It's a very fluid situation. And we believe that the spot prices would work for us. In fact, we believe that our gas is competitive at any, in any, under any circumstances. In general, I know now there was talk, a lot of talk about possible LNG exports ... imports for our shale gas. I would believe that we will be benefiting and will be competitive, the more supplies there are.

Monica Trauzzi: Do the Russians view you as a competitor?

Elin Suleymanov: They say they don't, so we take them at their word.

Monica Trauzzi: What are your government's plans for developing the gas that exists beneath the Caspian?

Elin Suleymanov: Well, part of it is, of course, Shah Deniz 2 Consortium ...

Monica Trauzzi: Right.

Elin Suleymanov: ... which at the first phase would bring the gas to tap. But there are additional volumes which we believe will be brought to phase two and phase three, which go to the Balkan nations and farther up into Europe. But it's not only Shah Deniz. There are also Asiman and Babek other fields outside, offshore in Azerbaijan, which are actually quite promising.

Monica Trauzzi: There's a lot of political instability in the region. How concerned are you that that might spill over and affect the safety and security of the pipeline itself?

Elin Suleymanov: Well, whenever there is a resource competition, there is certain degree of tension. However, Azerbaijan, in partnership with Georgia, Turkey, and the United States, have shown that even when the situation is tense, you could build projects, and the Baku-Tbilisi-Ceyhan is a good proof of that. In fact, those kind of projects contribute to stability. You can't have stability with prosperity. That I think goes hand in hand, in fact, this kind of project will contribute to making our region more stable and more prosperous.

Monica Trauzzi: So we spoke about some of the economic impacts that some of the European nations might see as a result of this pipeline. What about your country? What are you expecting this to do for your economy?

Elin Suleymanov: Azerbaijan has benefited greatly from our energy projects, including Baku-Tbilisi-Ceyhan. We look forward to benefiting from this as well, because what we need is sustainable growth, which will be reinvested in areas outside the energy sector, so transportation, education, new technologies, and all this. As a whole, we believe that the sustained growth base, to which energy is an engine in this particular case, is a very promising development for the future.

Monica Trauzzi: All right. Mr. Ambassador, thank you for coming on the show. Nice to see you.

Elin Suleymanov: Thank you, Ms. Trauzzi. Thank you.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

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