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doi. org/10. 52340/eab. 2024. 16. 02. 02 The proposed 'Vertical Gas Corridor' is a project that will directly challenge Russia's last remaining major gas pipeline Bratstvo - Brotherhood (Urengoy-Pomary-Uzhgorod route) into the heart of Europe. Bringing non-Russian gas into southern and central Europe via the Southern Gas Corridor has been a long-standing aim of the EU, regional EU member states, Turkey and gas producers as far afield as Central Asia and the Middle East, albeit with significantly differing agendas. Many projects, often grandiose, have been proposed over the years, often falling foul of the complex political and economic interests which crisscross the region. Russia's invasion of Ukraine in February 2022 provided yet another twist to this Levantine Great Game, creating both new impetus for supply diversification and new infrastructure options as the Kremlin's control over the pipelines originally built to bring gas west and south from Russia weakened. Now, under plans hatched by southeast and central European states, the region's growing gas interconnectivity could take another significant step forward, further weakening Russian gas Monopoly JSC Gazprom. The natural gas has only recently, since the 70s of the last century, turned into one of the main types of fuel. At the beginning of this century, about 88-90% of natural gas was delivered by gas pipelines under long-term economic contracts directly from a specific supplier to a specific customer, the rest - by tankers, in the form of liquefied gas (LNG). In 2021, global LNG imports, according to the report of the International LNG Importers Group (GIIGNL), increased by 4. 5% compared to the previous year and reached 513. 7 billion cubic meters (372. 3 million tons). The group`s research notes that in 2021, the LNG already accounts for about 40% of the global gas market, with the rest coming through gas pipelines. In 2021, about 73% of the LNG (375 billion cubic meters, or 271. 8 million tons) was imported by Asian countries. In addition, only 36. 6% of the world`s LNG volume was sold on the spot market, i. e. in small lots, - the rest was sold through long-term contracts, thereby neglecting the market mechanism of free price formation. Due to the Russia-Ukraine war, the European Union`s gas supply from Gazprom`s pipelines was interrupted and Brussels is desperately looking for alternative routes. For the first time, the idea of such an alternative in the form of the "Trans-Caspian gas pipeline" was put forward by then US President Bill Clinton in 1996. However, due to the uncertainty of the status of the Caspian Sea and the lack of delimitation of its shelf boundaries, due to the conflicting position of Azerbaijan, Iran and Turkmenistan, this project was not implemented yet. After the annexation of Crimea in 2014 by Russia, the construction of one of the components of the "Southern Gas Corridor" (SGC) supported by the European Union - the "White Stream" gas pipeline and the liquefied gas project AGRI (LNG) initiated in 2007 - "Azerbaijan-Georgia-Ukraine-Romania-Hungary Interconnector" was postopned for an indefinite time. It should be noted that these were the most promising projects for Georgia and Azerbaijan, since both of them turned aside not only Russia, but also Turkey and, accordingly, neutralized its transit hegemony. This gas, passing through the SCP, was sent through the Trans-Anatolian gas pipeline and the Trans-Adriatic (TAP), from Turkey to Europe as one EU's South Gas Corridor (SGC). The Russia-Ukraine war has disrupted global supply chains and weakened the world economy, but it provides a new opportunity for Azerbaijan. In particular, as the US and Europe impose sanctions on Russian oil and natural gas, Azerbaijan has a chance to increase gas exports through 2022 and in the coming years via the 3, 500-kilometer Southern Gas Corridor (SGC), which runs through seven countries and supplies gas to southern Turkey. Azerbaijan currently supplies 10 billion cubic meters of gas to Europe and 6 billion cubic meters - to Turkey, through the SGC. To meet the growing demand of Europe, Azerbaijan is also developing two new gas fields and is open to investment to expand the capacity of the SGC, in particular, by installing additional compressor stations, it will be possible to double the gas flow. However, according to the Azerbaijani Ministry of Economy, "reduced investment" from Europe may slow down the country`s efforts to increase supply. Therefore: -The role of the "Southern Gas Corridor" in the context of the Russia-Ukraine war, and, consequently, the transit importance of Georgia for the EU energy security will increase even more;- The "corridor" will provide the Caspian countries with new, increased opportunities for the export of energy resources to the world market and will have a significant impact on the security and stability of the region;The Vice Prime Minister, Minister of Economy of Georgia, Mr. Levan Davitashvili, stated at a briefing held on November 21, 2022 that the Georgian government is working on a project to supply gas from the Caspian Sea shore of Azerbaijan to Europe through Georgia. According to Mr. L. Davitashvili the project, in which Azerbaijan, Romania and Hungary also participate, already have been started in 2015 and provides for a plan by which ". . . gas will be liquefied on the territory of Georgia, and then it will be re-gasified in Romania. " Unfortunately, this project was stopped and had no further development", he said, adding that ". . . Europe is especially interested in alternative sources of gas supply, when everyone is talking about diversification of energy supply. This project has gained special relevance this year". Mr. L. Davitashvili noted that the evaluation of the project and the infrastructure in the territory of Georgia-Azerbaijan is underway. "It won`t happen in a day or a year, " he said, adding that ". . . first, we need to depict a complete picture. . . then we need to formulate a detailed action plan. . . and start implementing this plan step by step, including attracting investments. "At the same time Azerbaijan`s oil is in decline, but gas is growing. The future of Azerbaijan and Georgia energy cooperation is with natural gas EU's SGC and the Black Sea LNG terminals. Special attention should be paid to the prospects of supplying liquefied natural gas from Azerbaijan via Kulevi, Georgia to Romania from the SOCAR`s BST Ltd. References: • Extra-EU Natural Gas Import Share from Russia 2010-2022, https: //www. statista. com/statistics/1021735/share-russian-gas-imports-eu• Gazprom Plunges to Worst loss in Decades. International The News, By News Desk, May 03, 2024. https: //www. thenews. com. pk/print/1184714-gazprom-plunges-to-worst-loss-in-decades;• Tim Wallace (2024). How Putin's Gas Empire Crumbled. Gazprom Once Kept the Lights on in Europe – Now, It Faces Humiliating losses. https: //www. telegraph. co. uk/business/2024/05/03/russia-putin-gas-empire-crumbled-europe-;• Zurab Garakanidze, Nata Garakanidze. INFLUENCE OF THE MIDDLE EAST TENSION ON THE EU'S SOUTHERN GAS CORRIDOR (co-author). THE Caucasus p. 74-81. http: //www. ca-c. org/c-g/2013/journalₑng/c-g-1-2/07. shtml• Katkov M. (8 June, 2022). Kak i kogda SE khochet zamenit gaz iz Rossii? How and When Does the EU Want to Replace Gas from Russia? In Russian https: //www. vedomosti. ru/business/articles/2022/06/08/925631-chem-es-zamenit-gaz• Georgian Competition and Consumer Protection Agency (2024). horizontaluri kontsentratsiis shepasebis sakhelmdzghvanelo. Guidelines for the Assessment of Horizontal Concentration. in Georgian https: //gcca. gov. ge/uploadsₛcript/legislation/tmp/php02x91B. pdf• Meduza (7 May 2024). "Gazprom" stal ubytochnym vsego cherez dva goda posle ukhoda s yevropeyskogo rynka - vpervyye v XXI veke. Pochemu Kitay ne pomog? Kak kompanii mogut zarabatyvat dengi seychas? Gazprom Became Unprofitable Just Two Years after Leaving the European Market - for the First Time in the 21st Century. Why Didn`t China Help? So How Can Companies Make Money Now? in Russian https: //meduza. io/feature/2024/05/07/gazprom-stal-ubytochnym-vsego-cherez-dva-goda-posle-uhoda-s-evropeyskogo-rynka-vpervye-v-xxi-veke-pochemu-ne-pomog-kitay-i-na-chem-teper-zarabatyvat-kompanii• Monthly Oil Market Report. https: //www. opec. org/opecweb/en/publications/338. htm• SE European Gas Transmission Initiative Set for Expansion Under New MOU. https: //www. spglobal. com/commodityinsights/en/market-insights/latest-news/natural-gas/011924-se-european-gas-transmission-initiative-set-for-expansion-under-new-mou• Europetime (2024-03-12. ) levan davitashvili: ვიმედოვნებთ, რომ წელს ნავთობის ტრანსპორტირება მოხდება ბაქო-სუფსის მილსადენით Levan Davitashvili: We Hope that Oil Will be Transported through the Baku-Sufsi Pipeline this Year. in Georgian https: //europetime. eu/en/article/55346-levan-davitashvili: -imedi-gvaqvs, -rom-mimdinare-shels-ukve-daishkeba-navtobis-gatareba-baqo-sufsis-milsadenit Keywords: EU SGC, Gas pipelines, Energy security, Caspian Sea, Black Sea, Gazprom, Socar, LNG, Gas corridor. JEL Codes: O13, P28, Q40
Garakanidze et al. (Fri,) studied this question.