State Oil Company of the Azerbaijan Republic (SOCAR) starting major developments in the European energy marketplace.
Recently SOCAR launched the $6.3B Star Refinery in Turkey, making it the most substantial direct foreign investment in the country. Besides, it is one of the leaders of the Southern Gas Corridor’s Trans Adriatic Pipeline (TAP).
Along with STAR Refinery’s, more than 3.5 billion cubic meters of annual oil processing capacity is TAP’s diversification of Europe’s gas supply when it is expected to launch in 2020. Both indicate Azerbaijan’s ability to grow as a global force in the energy marketplace.
TAP enhances SOCAR’s power in the global marketplace. It connects with the Trans Anatolian Pipeline (TANAP) at the Turkey-Greece border, stretching across Greece, Albania and the Adriatic Sea and finally reaches the south of Italy. There it will connect to Italy’s natural gas network.
Both TANAP and TAP will help to solve Europe’s energy reliance on Russia. The TAP pipeline alters the continent’s energy map, contributing to increased energy demand of Europe. The pipeline will also transport Shah Deniz II gas to Greece and Bulgaria.
Since TAP is an international consortium of energy leaders SOCAR, BP, Snam, Fluxys, Enagás and Axpo, Azerbaijan will tap into new markets in Europe. TAP is to transport nearly 10 billion cubic meters of Shah Deniz II gas to Europe per year and 8 billion cubic meters of Shah Deniz II gas to meet the growing demand of Italy and adjacent markets.
Southern Italy is a significant energy consumer as it is currently based on the coal-fired electricity. Increasing the share of natural gas and decreasing the share of coal in energy production will contribute to environmental protection. Additionally, a new gas supplier entering the market could potentially reduce energy prices in Italy.
While energy self-sufficiency develops as a global issue, scholars such as Theodore Karasik, Sr. Advisor to Gulf State Analytics and an Adjunct Senior Fellow at the Lexington Institute stated – “These countries are currently seeking solutions to guarantee their energy independence in the coming years so that the EU as a whole and specific countries within the organization can seek alternatives. Azerbaijan is naturally a key player in this Arena. The USA is likely to continue promoting the project because of Washington’s interest in Baku.”