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by Oğuzhan Akyener:

EU is the biggest energy importing structure in the world and Russia is her major supplier. Increasing political conflicts with Russia troubles EU on energy security that rushes EU to diversify her energy supplies.

One of the most popular candidates for EU’s future energy supply is the Caspian resources placed in between Russia, Azerbaijan, Turkmenistan, Iran and Kazakhstan, however, as of today (due to political reasons) only Azeri and Turkmen natural gas resources have the priority for EU’s future energy security strategies. These strategies under the forth corridor concept by EU were partly realized through southern gas corridor (SGC) initiated by Azerbaijan. In such a corridor Azerbaijan is planned to be the main supplier country and to a greater extent Turkmenistan and others as well. While Azerbaijan and Turkey will be the transit countries and EU and also Turkey will be the markets in demand.

As there are no important political obstacles for Azerbaijan as the supplier, demand market or transit countries however; unreconciliated political situation of the Caspian Sea is one of the most important milestones for potential supplier Turkmenistan to flow its gas through Caspian to Azerbaijan stepping forward with the corridor since early 2000.  Moreover, the political encouragements and support of EU and US, and related parties have not been enough to take tangible steps to resolve the problem.

However, in any case, even if the linkage of Turkmen gas to Azerbaijan flowing through the demand market is assumed politically possible, another important matter will be the economic fundamentals as a determining factor for consideration.

In this paper, initially by assuming the political conflicts on Caspian is resolved, success rate and future of Southern Gas Corridor will be evaluated from the view of capacity point through assessing potential shippers, and of economic parameters, then the place of Turkmen gas in  SGC will be evaluated. In addition, for Turkmen gas exportation to EU, other two possible roots: through Iran & Turkey and Russia & Turkey (through new popular line Turkish Stream) will be analyzed in terms of economic parameters affecting the end market competition.

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