The role of Azeri natural gas in meeting European Union energy security needs

Abstract

Meeting the European Union's natural gas demand will require increasing volumes of imports in the foreseeable future. Recognizing the need to ensure uninterrupted and secure supplies of natural gas imports at all times, the European Union (EU) has actively sought to diversify its sources of supply, including obtaining natural gas from Azerbaijan through the Southern Gas Corridor (SGC). In pursuit of this objective, the EU has provided financial support for parts of the Southern Gas Corridor. In this paper, a combination of cost economics and Rational Choice Institutionalism (RCI) framework has been used to explain the policy choice made by the EU to support the SGC. We observe, that the choice of using the SGC as a supply source has been despite the relatively higher cost of delivery of Azeri natural gas into the EU. The motivation for the EU here is characterized by the strategic importance and part of its efforts to diversify sources of supply in the RCI framework. In this context, the EU is delivering energy security services to its member states who in turn have muted their sovereign rights in exchange for a diversity in the source of supply. This is possibly the only study that measures up the economic cost against choices made under RCI in natural gas security literature.