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Event recap
On February 16, 2021, the Atlantic Council Global Energy Center hosted a virtual conversation on lessons learned from the successful completion of the Southern Gas Corridor. Elshad Nasirov, vice president for investment and marketing at the State Oil Company of the Republic of Azerbaijan (SOCAR), delivered keynote remarks and set the scene for discussion on this multilateral achievement. The ensuing panel conversation featured three Atlantic Council nonresident senior fellows, Neil Robert Brown, managing director at KKR Global Institute and former aide for the US Senate Foreign Relations Committee and the late Senator Richard Lugar, Ambassador Matthew Bryza, former US ambassador to Azerbaijan, deputy assistant secretary of state, and National Security Council official responsible for the Caspian region, and Professor Brenda Shaffer, research faculty member at the Naval Postgraduate School whose published work on Caspian energy has informed policymakers throughout the Corridor’s development. The three were joined by Robert Scher, head of international affairs at bp America, who served as the assistant secretary of defense for strategy, defense, and capabilities from 2014 to 2017. Moderating the conversation was Ambassador Richard Morningstar, founding chairman of the Global Energy Center, who formerly served as the State Department’s special envoy for Eurasian energy, as well as US ambassador to the European Union and Azerbaijan.
Elshad Nasirov began by surveying the journey of Azerbaijan’s oil and gas industry from post-Soviet underdevelopment to its emergence as a powerful regional player. Recalling the challenges SOCAR faced in cementing that status with the Southern Gas Corridor—from low commodity prices stifling investment to environmental protests around the project’s Italian terminus, to, finally, the pandemic—he praised the perseverance of the company and its international partners to complete the Corridor under budget and ahead of schedule. The Southern Gas Corridor is a “geopolitical gamechanger,” declared Nasirov, though he stressed that Azerbaijan does not intend to supplant competitors, only to increase Europe’s gas supply. That, he noted, will undercut a single supplier’s monopoly and benefit Mediterranean consumers with a diversified, liquid gas market.
Nasirov then looked ahead to SOCAR’s “phase two,” in which the company will reach for additional markets, transit gas from new sources outside Azerbaijan, and develop untapped domestic reserves. “Energy is never used as a coercive political tool,” he insisted, detailing Azerbaijan’s rapprochement with Turkmenistan to collaborate on Caspian gas projects and predicting similar ventures to build bridges with Armenia after the war. “The best protection for the Southern Gas Corridor,” Nasirov concluded, “is peace.”
Neil Brown then gave a US appraisal of the geopolitical transformation promised by the Southern Gas Corridor. Brown lauded the pipeline as the essential “backbone” for a liberalized regional gas market, recalling his work for the late Senator Richard Lugar and the Senator’s placement of energy issues “at the core of the transatlantic partnership.” Brown commended the pipeline’s power to “dilute the potency of gas for geopolitical ends by Russia” and enhance the sovereignty and independence of the region’s smaller states, both vital US interests. He noted that gas provides an important avenue for cooperation that will “anchor key US strategic relationships,” including with Azerbaijan.
Next, Professor Brenda Shaffer relayed that the pipeline “should remind us that the “geo-’ of geopolitics is still really important,” alongside issues of trade and multilateral cooperation. Shaffer celebrated the Corridor’s promise of a reliable, price-stabilized gas supply to Europe and the Eastern Mediterranean at times when US liquefied natural gas might be unavailable. The importance of the pipeline, she observed, is enhanced rather than diminished by the clean energy transition, since natural gas “enables renewables,” providing reliable backup generation during periods of intermittency.
Ambassador Matthew Bryza elaborated further on the geostrategic aspects of the project. “Our goal was never to isolate Russia,”’ he maintained, but rather to convince the Kremlin to “behave more according to market-based principles than monopolistic ones.” Contemplating the Corridor’s future, Bryza foresaw the gas trade enabled by it smoothing over differences between Turkey and Israel, while petrochemical manufacturing projects could “heal the wounds of war” between Azerbaijan with Armenia. “Regional cooperation was absolutely critical,” he noted, adding that “none of this could have ever happened if there wasn’t also cooperation with the private sector,” since the economic rationale for the pipeline had to align with the political rationale.
Robert Scher then recounted the private sector experience with the project. While bp and its engineers viewed the pipeline as a “clear technical issue,” Scher conceded that technical solutions only work “if commercially and politically viable.” The lesson bp took was that future projects would “need all of those pieces again,” including technical, business, and political expertise. Envisaging the future role of natural gas, Scher insisted it will be “part of the solution and a bridge” for decarbonization efforts, though admittedly “not forever.” bp’s own 2050 carbon-neutrality goal, he mentioned, demonstrated the company’s desire “to be a part of the solution” within a diversified energy mix.
In a lively Q&A session, Ambassador Richard Morningstar and the audience pondered the role of the Southern Gas Corridor in the future of regional geopolitics, cooperation, and the energy transition. On geopolitics, panelists spoke of the impact on Russia and Iran, whose regional market dominance may be diminished. The potential for gas to foster cooperation between Israel and Turkey was also discussed, as was the repairing of relations between Azerbaijan and Turkmenistan, and how that could act as a model for others, including Azeri post-war reconciliation with Armenia. The US role was also questioned, particularly whether US taxpayers or private sector investors would continue to be interested in financing projects in the region. Finally, on the energy transition, Nasirov assured that, while gas’s role in the energy system will persist, SOCAR is already exploring the possibility of utilizing pipeline infrastructure to eventually move hydrogen.
Paddy Ryan is a Spring 2021 intern at the Atlantic Council Global Energy Center.
Agenda
Keynote remarks by
Elshad Nasirov
Vice President, Investments and Marketing
State Oil Company of the Republic of Azerbaijan
A conversation with
Neil Robert Brown
Managing Director
KKR Global Institute
Nonresident Senior Fellow
Atlantic Council Global Energy Center
Amb. Matthew Bryza
Nonresident Senior Fellow
Atlantic Council
Prof. Brenda Shaffer
Research Faculty Member
Naval Postgraduate School
Nonresident Senior Fellow
Atlantic Council Global Energy Center
The Hon. Robert Scher
Head of International Affairs
bp America
Moderated by
Amb. Richard Morningstar
Founding Chairman
Atlantic Council Global Energy Center
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