Azerbaijan’s questionable future gas policy

5 Nov

“Azerbaijan might not find market to sell its gas except for close neighbors. Even to close neighbors it will be compelled to export gas for market price. There might be serious problems if dependency continues so much,” economic expert and co-founder of Republican Alternative Movement Natig Jafarly sounded these predictions at the press conference devoted to state budget policy on October 30, 2012. Expert stressed that Azerbaijan government chose wrong strategy, by laying hopes on gas from a field Shah Deniz-2, as they expected after oil, gas era will start. Jafarly underscored that the gas situation in the world has profoundly changed after shale gas concept came up. He told journalists that “As shale gas is buried in the deep layers beneath the earth’s surface, previously its extraction was very expensive for which reason it was not developed. But the cost of extracting shale gas with new US fracking technology is already very cheap, even cheaper than production of oil fields in Europe, approximately 80-90 USD per 1000 cubic meters. However in European market gas price is 400 USD.”

He underlined that USA suddenly became the world’s largest gas producer in 2009 leaving behind Russia and Qatar. Therefore gas price started to slash. Economist mentioned that though in 2008 president of Gazprom Alexei Miller predicted to sell gas to Europe by 2012 for about 1000 USD , now they find it difficult to sell it for even 380 USD and in the future the gas price is said to go down because shale gas reserves also found in China, Poland, Germany and other places. “In the closest time certain environmental issues are expected to be resolved and new technology will be more advanced. After that, conjuncture of the world gas market will be totally different. And then there is an anxiety that Azerbaijan might not find market to sell its gas except for close neighbors. Even to close neighbors it will be compelled to export gas for market price. There might be serious problems if dependency continues so much,”  predicted economist.

He thinks that government made strategic mistake when in 2008 gas was announced as priority field to develop in the next 10 years , as president Ilham Aliyev several times in 2008-2009 years sounded opinion that gas will bring as much profit as oil.

Expert said that in the near future when renewable energy resources in the world such as hydro power, wind and solar energies will reduce dependency on foreign oil and it is going directly to impact on our oil revenues as well. “For this reason I think in the future it would be wise to develop in Azerbaijan agriculture, it is also very important in terms of food security and oil refinery industry, as we have many skilled people who have experience in this field,”  he concluded near the end of press conference.

P.S. You can be familiar with other topics disccussed at the press conference in the coming days.

By Vusal Azizov

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