"Race is on for the grand southern corridor"
The Southern Gas Corridor is a $50 billion project that encompasses the TANAP-TAP and possibly IAP pipelines all the way from the Caspian up the Italian market seems to have a twist that may in fact resurrect the now forgotten Nabucco pipeline project, possibly via the infusion of Iranian gas. In such a case a significant shift of balances and change of corporate plans will occur.
Recently the President of Iran, Hasan Rouhani, publicly stated that his country could assist in the aforementioned plans and assured the Austrian government during his state visit there that amounts up to 25 bcm per annum could be available. It is of interest to note that the diameters of the interconnectors between Iran and Turkey are already in the same size - 56 inches - thus the plan could move forward in a reasonable time frame since additional amounts would not require more than a few more compressors and upgrades of the already existing infrastructure.
In the meantime, French energy giant Total announced that it will begin the commercial production of its Absheron gas field in Azerbaijan in 2021. The gas in place is estimated at 350 bcm, an amount while on the medium scale, would be vital in the event a Nabucco redux is planned, since the amounts necessary to re-enact such a large project are to the tune of at least 50 bcm per year in order to cover the Turkish, Balkan and Central European markets plus Italy. In that sense, apart from Iranian sources, further Azeri gas would be streamlined by taking into account Baku’s domestic and rising gas needs for the long-term. The Absheron field is 40% owned by Total, 40% by Socar and 20% by another French company, GDF Suez.
Moreover, the initial stages of TAP pipeline back in the mid 00's, credible diplomatic sources indicated around the strong interest of Paris to tap into Iranian and Caspian gas. Nevertheless, the consequent diplomatic and economic embargoes against Teheran and the change of course of events with the development of the Shah Deniz has dwarfed these ambitions.
As it was noted previously, the amounts needed for the present day planning of the Southern Gas Corridor is estimated at least at $50 billion, without taking into account secondary though vital infrastructure such as gas storage facilities, interconnectors between the Balkan states with reverse flow capacity, the IAP pipeline from Albania to Croatia and through a mountainous terrain and countries with a minuscule gas market in place. Moreover, the "grand" plan by Eurocrats and local countries alike, also detail LNG terminals in Greece and Croatia so as to further boost diversification and move away from reliance on Russian gas provided by Gazprom by 2025 onwards. All the above would skyrocket costs up to an estimated $80 billion, during a period of depressing gas markets across Europe.
Furthermore the proven gas reserves of Azerbaijan as of 2014 are estimated by international authorities at around 1 tcm and the local market absorbs 9 bcm of it with an average 2% increase on a steady long-term course. By taking the numbers down and factoring in Turkey's needs of approximately 50 bcm per year with additional amounts of 70 bcm for Italy and another 45 bcm for Greece, Bulgaria, Serbia, Croatia, Hungary and Austria - then the bigger picture that emerges is simply Azeri fields cannot make a substantial diversification difference even in the mid-term of around 10-20 years ahead.
Thus the Iranian factor comes into play and under tacit US approval, other players such as Russia and China, along with India, Pakistan and Saudi Arabia will play a vital role in which direction the negotiations will go. China is eying the natural gas Silk Road that will bring Iranian gas through central Asia pipeline system into its Eastern provinces, due to the high needs its domestic market will have in the coming decades, rivalling in consumption the American consumers but with far less indigenous resources.
Further both India and Pakistan are in a long-term process of sourcing Iranian gas via a unified pipeline. Moreover Russia has plenty of geopolitical leverage in Teheran via its support for the Shia crescent and the special relationships with Lebanon-Syria and Iraq, now in the midst of a vicious sectarian war. Saudi Arabia views Iran as an existential threat due to the Shia minorities concentrated en mass in its oil producing areas in the East of the country, as well as by Iran's posture as the most advanced technologically nation in the region with obvious ambitions to become the primal political unit.
Therefore by taking into account a very complicated situation in the Middle East, it is logical to assume that Iran will use a prospective Nabucco revival as a policy tool in order to extract maximum benefits from all players mentioned, regardless if this project will ever take off. For certain, the word 'Nabucco' will be heard again in the energy policy circuits in both sides of the Atlantic, for the short term at least.