The Caspian: Key region for EU #Energy sector development

On June 12, in the Turkish city of Eskişehir, the President of Turkey Recep Tayyip Erdoğan and his Azerbaijani counterpart Ilham Aliyev launched the Trans-Anatolian Natural Gas Pipeline (TANAP) project. It’s the second section of the Southern Gas Corridor (SGC, which comprises the operating South Caucasus Pipeline, the commissioned TANAP, and the Trans-Adriatic Pipeline (TAP), currently under construction). SGC is intended to enhance EU energy security through diversification of energy supply channels. Commissioning of the third and last section of the SGC is scheduled for 2020.

The initial capacity of the TANAP is expected to reach 16 billion cubic meters (bcm) of gas per year, with 6 bcm earmarked for Turkey’s internal market and the remaining 10 bcm are destined for EU countries. For comparison, the estimated capacity of the TurkStream pipeline will be totaling 32 bcm of gas per year. Half of this volume will be directed to Europe’s southern countries, while the other half will be used to secure Turkey’s energy need.

The main source of gas supply for the TANAP will be the Shah Deniz field in the Caspian Sea operated by the European oil major BP, which owns 25.5% of the project. An equal share is held by the Norwegian Statoil group’s local subsidiary.

Commenting on the launch of the TANAP, the Vice-President of the European Commission for Energy Union Maroš Šefčovič noted: “We all stand to gain from this 'bridge' between the Caspian region and the EU market. It is in our joint interest to make it a success. Our long-term objective is to create a pan-European energy market based on free trade, competition and diversified supplies, sources and routes. This shows that the Energy Union does not stop at the EU's borders and it has a strong external dimension”.

Multilateral cooperation of European energy companies in the Caspian region is not limited to the Trans-Anatolian gas pipeline. Since 1997, the consortium of British Gas (now part of Royal Dutch Shell, which owns 29.5% of the project), Eni (29.5%), the US Chevron (18%) and the Russian LUKOIL (13.5%) is developing the Karachaganak oil and gas condensate field in Kazakhstan. In 2012, the group was joined by NC KazMunaiGaz (10%). The joint venture was named Karachaganak Petroleum Operating B.V. (KPO).

The Karachaganak gas condensate field is one of the largest in the world. Its estimated original oil reserves in place amount to 9 billion barrels of condensate and 1.35 trillion cubic meters of gas.

Oil and gas production there is carried out at three processing units. The product received is exported by three key routes, allowing for flexible response to market changes. Currently, about 80% of crude oil is being exported to the European market.

Being one of the key investors in Kazakhstan’s economy, KPO implements an extensive program aimed at ensuring the country’s sustainable development. Its action plan includes the social infrastructure support, cooperation with the local community, as well as reducing the negative impact on residents of the area where business is presented.

In 2015, the Government of the Republic of Kazakhstan issued a decree to expand the sanitary protection zone around the Karachaganak field, which at that time was included with two villages – Berezovka and Bestau. KPO implemented a project to resettle the residents of these villages to the city of Aksai in close cooperation with local authorities and in full compliance with the Kazakh legislation and international standards.

Resettlement was divided into two phases: new housing was first provided to 82 socially vulnerable families. The second phase involved resettlement of 373 more households. In a result of consultations each family received housing conditions equivalent to the ones they had before. By now, the process of resettlement has been officially completed.

KPO operates in a transparent manner and sticks to the international standards regarding occupational health, safety and environment protection. The quality control of atmospheric air is implemented on a constant basis. Special emphasis is put on the application of best technological practices aimed at reducing air pollution.

At the Karachaganak field, the utilization rate of associated petroleum and natural gas amounts to 99.97%, being a benchmark indicator for European processing capacities.

In addition, KPO was one of the first companies in the world to implement in Kazakhstan the reinjection of natural gas into reservoir. This technique has significant environmental benefits and allows for an increase in the efficiency of raw material extraction. KPO’s technological solutions are becoming a benchmark for consortium members’ Europran manufacturing facilities.

Nowadays, the goals for ensuring the EU energy sector security are being achieved in the Caspian region through long-term international cooperation, which allows for the development of breakthrough technological solutions that can be implemented at the manufacturing facilities within the Union.

This once again proves that multilateral international technological partnership underlies future achievement of a stable and safe low-carbon energy mix in Europe.

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