Europe & Middle East
At a time when European indigenous gas supply is declining new hope is being placed on gas supply from the Caspian, eastern Mediterranean and the Middle East. This supply is to be delivered through new world scale pipeline routes transiting Turkey and southeast Europe and potentially as LNG from the Mediterranean.
Potential resources in Azerbaijan and Iraqi Kurdistan are significant and with buyers in Europe seeking to reduce their cost of gas supply and growing demand in Turkey these resources offer a real alternative.
The political, technical and economic challenge of development are enormous but with the Shah Deniz II project targeting first deliveries to Europe in 2019 and gas soon to be piped from Iraqi Kurdistan to Turkey the so-called Southern Corridor is beginning to open, creating new opportunities for suppliers, buyers and a new source of competition in key growth markets of Turkey and established markets to the west.
Key Issues
- Significant investment is required to bring new supply to market at a time when demand in Europe is down and traditional utility buyers have weakened balance sheets.
- Projects are immensely complex facing technical, commercial, political and geopolitical challenges requiring the alignment of numerous governmental, regulatory and commercial stakeholder.
- Balancing the cost of development against the value of gas in the target markets is increasingly difficult made yet harder by recent volatility in the oil market.
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