Earlier deliveries of liquefied natural gas (LNG) were considered economically viable only for distant markets - more than 3,000 kilometers, for example, from Australia or Qatar to China or Japan. The pipeline system delivering natural gas today also remains the dominant, covering 93 percent of the world's supply. But gradually the situation began to change. It is obvious that having the necessary infrastructure, it is possible to increase the number of markets, conclude less long-term and more flexible contracts that bypassing transit countries, in other words, be more mobile, when it deals with the supply of LNG. The statistics also tells about this: over the last ten years, the volume of world LNG trade has doubled.
The two South Caucasus countries and two European Union countries by the example of AGRI (Azerbaijan-Georgia-Romania Interconnector) demonstrate an example of mutual economic cooperation beneficial to all sides. In addition, in light of a memorandum on strategic cooperation signed several years ago between the European Union and Azerbaijan in the energy sphere, it is also demonstrating that words are not thrown in the drain. Third, this project that brings together the regions of the Caspian and Black Seas will be able to meet the needs of the countries of Southeast Europe, more than any other European countries subject to external circumstances with an uninterrupted supply of gas.
Low price, decreasing the cost, and environmentally friendliness of LNG attract more companies and countries to investing in the creation of appropriate infrastructures. In 2010, the export potential of LNG to the world amounted to 262 million tons per year, while import capacity is equal to 565 million tons. By 2015, growth will be 90 and 105 percent respectively. By 2015, in the global market the LNG will have six export markets and sixteen import markets. The number of LNG tankers in the world over the next three years will increase by 55 units and will reach 400 with a total volume of 58.4 million cubic meters (after the liquefaction process at a temperature of -160 C, the gas occupies a volume of 600 times smaller from its source). Technology C3MR, optimized cascade, APX will continue to be key technologies for liquefying gas. While large national oil companies will continue to dominate in the global LNG industry, private companies will be leaders in the regasification process. In the period from 2010 to 2015, over $140 billion be invested in the construction of new enterprises to export LNG (data from LNG Reports "Global LNG Trends Outlook and Business Prospects", January 2011).
AGRI project envisages transporting Azerbaijani natural gas through pipelines to the Black Sea coast of Georgia (Kulevi Port), where a terminal for its liquefaction will be built. Further, the LNG will be transported by tankers to the terminal in the Romanian Port of Constanta for re-gasification and then, in the form of natural gas, will be available to customers in Romania and Hungary (Arad-Szeged interconnector) and in the future, and for other European countries. The capacity of the project is considered in three versions: two billion cubic meters of gas per year, five billion cubic meters and eight billion cubic meters. According to preliminary data, depending on the capacity of the project, its cost will range between 1.2 billion to 4.5 billion euros. Participants of the project are Azerbaijani SOCAR, Oil and Gas Corporation of Georgia, the Romanian ROMGAZ and Hungarian MVM. Each has a 25 percent shareholding. In the future, Bulgaria also can join the project.
Growing demand for gas in Europe, mainly for electricity production, stringent environmental policies, the increasing dependence on imports on the backdrop of a decline in domestic production in EU countries are factors which play a role in the development of the LNG industry. The largest importers of LNG in Europe at the moment are France and Spain.
Europeans are paying close attention to security and diversification of supply. According to data provided by BP, in 2009, the entire Romanian imports (2.05 billion cubic meters) fell on Russian gas, and almost all imports to Hungary (with the exception of 0.7 billion cubic meters from Germany and 0.2 billion from France) also came from Russia.
The Minister of Industry and Energy of Azerbaijan Natig Aliyev said the main purpose within the AGRI project is to prepare a feasibility study (FS). He said there are two options for funding the feasibility study. The first option is the European Union, which as an interested party may provide funds as a grant to prepare a feasibility study. The second option is - if a private organization that plans to continue to finance the project further will provide a grant. Work in this direction is currently underway. Earlier, Deputy Secretary of State for Economic Affairs and Climate Change at the Ministry of National Development of Hungary Peter Olazhos said that the feasibility study will be prepared by summer 2012.
AGRI is the first LNG project, implemented in the Black Sea region. At a global forum of global infrastructure leaders, held in New York in January this year, it was listed as one of hundred of the best infrastructure projects in the world. But in the long term, it may appear a rival. More recently, Russian Prime Minister Vladimir Putin instructed to analyze the opportunity to build a LNG plant on the Black Sea and calculate the cost of transporting liquefied natural gas to Europe under the South Stream Project.