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Eurasianet

Eurasianet

EurasiaNet.org provides information and analysis about political, economic, environmental and social developments in the countries of Central Asia and the Caucasus, as well as in…

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Azerbaijan Eyeing Gas Opportunity In Europe

Azerbaijan Eyeing Gas Opportunity In Europe

Azerbaijan is running lower on energy income but, amidst a revived push for a role in gas distribution in Europe, not on energy-ambitions.

Baku is pushing for the European Union’s seal of approval on the planned takeover of Greece’s gas distribution grid by Azerbaijan’s state oil and gas corporation, SOCAR. Energy Minister Natiq Aliyev expressed dismay that EU-regulators are taking their time to make sure the deal is compatible with EU competition laws, EurActiv reported on March 11.

The deadline for the decision already was extended to April 22, but the minister's patience is running thin nonetheless, as SOCAR's tax contributions begin to slim down. Related: Russia Is Not Bluffing With Turkish Stream Project

Tax payments for February from the country’s cash cow dropped to some 108 million manats ($103.23 million), an 8.6 percent-decline from January, Azerbaijani news outlets reported.

That’s the effect of both slumping oil and gas prices, and a currency devaluation. The manat now can buy less for Azerbaijan than it could last month before losing more than a third of its value against the dollar and 30 percent against the euro. (Promoted within Azerbaijan as a patriotic symbol, it currently trades at 1.05 to the dollar and 1.11 to the euro). Related: Could Iranian Gas Be The Solution For Europe?

Arguably, SOCAR’s longstanding plans to run gas-distribution networks in Europe could shore up some of that revenue slack for Azerbaijan. As one local outlet put it, the country plans to “control” what gas it sends to European markets. In 2013, SOCAR paid 400-million euros (based on current rates, some $423 million) for two-thirds of Greece’s gas-distributor DESFA, and has its sights on Eastern Europe as well. Albania appears to be one of the first places where Azerbaijan hopes to get busy.

The EU, however, has concerns that Azerbaijan may get too much of that “control” as both a supplier and distributor of natural gas. Azerbaijan is set to become an important gas supplier to Europe through the Trans-Anatolian Natural Gas Pipeline, which will feed gas to Greece, Albania and Italy, and, via a link with Greece, to Bulgaria. SOCAR owns a 20-percent stake in the conduit, on which construction is slotted to begin this year, but Energy Minister Aliyev sees no conflict of interest with the company's DESFA holding. Related: The Global Energy Security War

Rather, Baku has claimed that Greece, struggling with a severe economic crisis, and energy-thirsty Europe need Azerbaijan more than Azerbaijan needs them. Yet its anxiety over the DESFA-decision suggests a slightly different tale.

By Giorgi Lomsadze for http://www.eurasianet.org/ 

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