As a result of the launch of the new energy projects related to natural gas in the South Caucasus and the Black Sea region, Georgia will receive a total of 188.8 million cubic meters more gas from Azerbaijan in 2021 compared to last year. According to the approved natural gas balance for the current year, in 2021 the country will receive a total of 2.518 billion cubic meters of gas from Azerbaijan, from which the volume of imports from SOCAR will be 1.504 billion cubic meters.
Upon the above-mentioned balance, the volume of "additional gas" (gas to be purchased at a special price), which will be allocated for Georgia from the extracted natural gas Shah Deniz field in Azerbaijan this year will be 508.7 million cubic meters, and "optional gas" (directly related to the volume of transit) - 505,9 cubic meters. As a result, Georgia will receive 1,014 billion cubic meters of gas from the South Caucasus Corridor, which is by 126 million more than last year. In 2020, the volume of "optional" and "additional gas" was 888.5 million cubic meters.
In addition, according to the balance, Georgia will receive an additional 200 million cubic meters of gas from Russia within this year. Also, noteworthy is the fact that this year it is planned to increase local extraction by about 11.08 million cubic meters. As a result, the gas supply forecast for 2021 will be more than 2.729 billion cubic meters.
As for consumption, according to experts, its volume is about 2.694 billion cubic meters, from which 1.794 billion cubic meters is the social consumption (664.9 million cubic meters is coming on thermal power plants and 1.129 billion cubic meters on population), and 899.82 million cubic meters will be allocated to the private sector.
As already mentioned, one of the crucial factors in increasing the volume of natural gas imports to Georgia is the launch of regional importance energy projects, which are "TANAP" (Trans Anatolian Pipeline) and "TAP" (Trans Adriatic Pipeline).
Let us briefly consider each project:
TANAP (Trans Anatolian Pipeline) Project
"TANAP" (Trans-Anatolian gas pipeline) will start as a continuation of the Baku-Tbilisi-Erzurum gas pipeline along the Georgian-Turkish border, near the city Akhaltsikhe, and will be ended at the western border of Turkey, south of the city of Edirne (Turkish-Greek border). According to the project, the pipeline will have a capacity of 16 billion cubic meters in the first phase of commissioning, i.e. in the first half of the 20s, and from 2026, when an additional compressor station will be put into operation, the capacity will be increased to 31 billion cubic meters. For Turkey, where natural gas demand is gradually increasing as the population grows, it is considered to deliver 6 billion cubic meters of gas. As it is known, natural gas in Turkey is already imported from Russia through the "Blue Stream" and the "Tebris-Ankara" pipelines from Iran. The remaining ten billion (25 billion from 2026) cubic meters will be allocated to the European market.
In addition, another stage of expansion of TANAP and TAP is under consideration, within the framework of which the capacity can be increased to 60 billion cubic meters as a result of the construction of an additional main pipeline. This project can be realized if, on the one hand, the demand for natural gas in Europe increases and, on the other hand, there is an increase in natural gas production in Azerbaijan, which in its turn ensures the supply of sufficient energy resources to the international market. This last condition can be met in the third phase of the Shah Deniz field development (SD3), in the framework of which the special plan is already worked out, as well as the consumption of “accompanying gas” which will be obtained from the extraction of "black gold" in various oil fields in the Caspian Sea, or from additional offshore deposits in the Azerbaijan section of the Caspian Sea, particularly, Absheron, Umid, Babek, Nakhichevan, Shafag-Asiman.
TAP (Trans Adriatic Pipeline)
On October 13, 2020, the consortium TAP AG announced the completion of the construction of the TAP gas pipeline. As a result, in 2021, Azerbaijan began supplying gas from the Shah Deniz field via the Trans-Adriatic Pipeline (TAP) to Europe.
The length of the TAP is 878 km, 550 km of which is located in the north of Greece, 215 km in Albania, and 105 km on the Adriatic sea and the remaining 8 km in Italy. TAP is the last component of the Southern Gas Corridor - an extension of TANAP. This pipeline should transport 10 billion cubic meters of gas annually to Europe. The ability of its capacities can double this volume.
The co-owners of the project are: SOCAR (20%), BP (20%), Snam (20%), Fluxys (19%), Enagas (16%) and Axpo (5%). The total cost of the project is 4.5 billion euros.
Geopolitical and geoeconomic significance of TANAP and TAP projects for Georgia
The implementation of the above two projects and, in general, the concept of the Southern Corridor will bring a significant political dividend and energy security to Georgia. In particular, if before the commissioning of the Trans-Anatolian gas pipeline – TANAP, Georgia was a transit country of gas only with the regional importance, at this stage the country is gradually becoming an international player. From today, natural gas on the territory of Georgia will play an important role in diversifying and securing international, mainly EU energy markets. In particular, the South Caucasus (Baku-Tbilisi-Erzurum) pipeline, located on the territory of Georgia, together with TANAP, provides gas supply from the Caspian fields to the Turkish and European markets. After the launch of TANAP, the southern gas corridor will gradually increase, including the volume of gas having been transported on the territory of Georgia, which has already been mentioned.
Economic Importance of the Project
For the achievement of the aim related to the becoming functional the TANAP and in general southern energy corridor, only on the territory of Georgia Shaz Deniz Consortium with the purpose of increasing the capacity of souther Caucasus pipeline has released about 2 billion USD Dollars within the four years period, which was significant importance for the economy and investment standartds of Georgia. Particularly, on the territory of Georgia in the framework of construction about 2000 people have been involved. There were constructed new pipeline with the lengths of 62 kilometers. Also, 2 additional compressor stations and a new pressure regulating and measuring station have been constructed. It is also planned to build a 2 km bypass pipeline near the pumping station on the Turkish-Georgian border.
It is noteworthy that in the first phase of TANAP's operation, in 2018, more than about 1.5 billion cubic meters of gas (from a total of 8 billion cubic meters) passed through Georgia in comparison to the previous year and in 2019 additional volume of gas - about 2.7 billion cubic meters was transported. That is, that according to the data of the same year, 9.2 billion cubic meters of gas was pumped on the territory of Georgia. As a result, as already mentioned, in 2021 the country has the opportunity to purchase an additional 125 million cubic meters of gas by preferential terms.
Based on the above, according to the preliminary forecast, with the launch of "TANAP", the volume of free natural gas which will be received by Georgia by 2023 will quadruple compared to modern period (300 million cubic meters). For example, including through TANAP (23 billion cubic meters) Georgia will receive 1.15 billion cubic meters. By 2026, the volume will be increased to 1.5 billion cubic meters (for 31 billion cubic meters of gas); It is planned to increase TANAP's capacity to 60 billion cubic meters by 2030, which means that 3 billion cubic meters of natural gas will be delivered to Georgia for free of charge, by b1.4 times more than Georgia's current consumption.
As a result of the implementation of the above-mentioned projects, the country will purchase 5% of the volume of gas outgoing on the territory of Georgia at a discounted price.
Conclusion
It can be pointed out that the implementation of the above-mentioned projects has the multifaceted interest, because of the stability and sustainable development of Georgia, its critical necessity for Azerbaijan, as natural gas producer and exporter country, as well as for Turkey (transit and gas distributor state) and Europe (Gas importer). It is of great importance for Europe to ensure that energy flows to its markets are maximally insured from political, economic or other risks. This is the defining factor within which the concept of the Southern Energy Corridor (as the route of the alternative import pipeline bypassing the territory of Russia) was formed. Naturally, such large-scale projects can be implemented only through the establishment of strategic partnerships between the participating countries, which is another important determinant of rapprochement between Georgia and the EU.
Therefore, in addition to economic factors and energy security, the concept of the Southern Corridor will also bring significant political dividends to Georgia, because energy projects via territory of this South Caucasus country will promote the further integration of Georgia to European and Euro-Atlantic structures.
