Azerbaijan, Georgia, and Romanian are jointly launching a liquefied natural gas (LNG) project, designated as the Azerbaijan-Georgia-Romania Interconnector (AGRI). The three governments regard their project as an element in the EU-planned Southern Corridor for Caspian gas to Europe.
AGRI envisages transporting Azerbaijani gas by pipeline to Georgia’s Black Sea coast, liquefying it there, shipping the liquefied product by tankers to Romania’s coast, and delivering the re-gasified product into Romania’s pipeline system and onward to EU territory.
On April 13, Azerbaijan’s Industry and Energy Minister, Natig Aliyev, his Georgian and Romanian counterparts Alexander Khetaguri and Adriean Videanu respectively, signed in Bucharest an inter-governmental memorandum on production and transportation of LNG. AGRI is the first-ever LNG project in the Black Sea. Underscoring the significance of LNG to the EU’s energy security, Romania is asking the EU to elevate AGRI to the status of a European priority project (Rompres, Agerpres, April 13–15).
The project involves the construction of a liquefaction plant and LNG export terminal for Azeri gas in Georgia, as well as an import terminal with re-gasification plant in Romania. The suggested coastal locations are Kulevi, site of the Azerbaijani-owned oil export terminal in Georgia; and Constanta, the largest Black Sea port, in Romania. With the Romania-Hungary pipeline interconnection, Arad-Szeged, soon due to become operational, AGRI can open the way for Azerbaijani gas exports into Central Europe.
The three participant countries are appointing a joint commission to draft the financial, commercial, and technical feasibility studies for the project. The group shall be headquartered in Bucharest. Preliminary estimates of the investment costs vary from $2 billion to $5 billion. The duration of construction work is estimated at four years. According to some preliminary assessments, AGRI can bring at least 7 billion cubic meters (bcm) of gas into Europe, resulting from re-gasification of Azerbaijani LNG (Trend Capital, www.day.az, April 13-15).
Romania had previously signed bilateral memoranda of understanding (MOU’s) at ministerial levels regarding LNG transportation, with Georgia in October 2009 and with Azerbaijan in February 2010. These paved the way for the tripartite inter-governmental agreement on the project. Romanian President Traian Basescu, by profession a merchant marine captain, is a long-time proponent of LNG transportation in the Black Sea with a terminal in his native city, Constanta. Basescu hailed the AGRI signing as a significant contribution to the European Union’s energy security goals.
Some Romanian government officials claim that AGRI can be completed ahead of the Nabucco project (Ziarul Financiar, Nine O’Clock). Such assertions are apt to create an impression that AGRI and Nabucco compete against each other. Nabucco, however, remains undoubtedly the central element in the EU-planned Southern Corridor.
From Baku’s perspective, the AGRI LNG provides one additional option for transportation of Azeri gas to Europe. Apart from LNG, Baku is also considering the option of Compressed Natural Gas (CNG). Azerbaijan’s MOU’s, signed in latter part of 2009 with Georgia and Bulgaria, envisage the possible shipping of Azeri compressed gas via Georgia and the Black Sea to Europe. This trilateral configuration resembles that of AGRI, apart from Bulgaria being the shipping destination for CNG in the western Black Sea.
Baku’s export options begin, however, with Nabucco in order of preference, though involving transit via Turkey to Europe; the Interconnector Turkey-Greece-Italy; export to (or via) Russia: and export to Iran. According to the Azeri state oil company’s President Rovnag Abdullayev, “The variety of these options will allow us to choose the right path” (www.day.az, April 13).
Georgia equally supports the LNG and CNG options for Azeri gas exports. Criss-crossed by currently operating transit routes and potential ones, Georgia welcomes the AGRI project for confirming the country’s reliability and buttressing (along with the other potential routes) EU and Euro-Atlantic interest in Georgia’s stability.
The LNG and CNG initiatives could threaten the proposed White Stream pipeline from Georgia to Romania, on the seabed of the Black Sea. The White Stream concept could become redundant, if Azerbaijan chooses to export its gas through liquefaction or compression in surface ships, rather than a seabed pipeline.
Visiting Azerbaijan on April 11, EU Energy Commissioner Guenther Oettinger described the Nabucco project as the EU’s top priority, followed by the Turkey-Greece-Italy Interconnector, both in the Southern Corridor’s planning framework. The recently appointed commissioner ascribed the “key role” to Azerbaijan, alongside Turkmenistan, in supplying the planned Nabucco pipeline (www.day.az, Trend Capital, April 14, 15). Baku, however, may ultimately select one of its panoply of options, such as AGRI or even Russia, if financial backing for Nabucco is not soon forthcoming from Brussels.