(fa fede solo il testo effettivamente pronunciato)
· Let me first of all congratulate IAI and its President, Ferdinando Nelli Feroci, for their timing in organizing this conference. The Italian Senat will discuss in the coming days the ratification of the Intergovernmental Agreement between Italy, Greece and Albania on TAP – the Trans-Adriatic Pipeline -, the final leg of the Southern Gas Corridor (SGC). The draft law will then go to the Chamber of Deputies for the final approval.
· Last week the Azeri capital, Baku, hosted the signature of one of the biggest sales in the history of oil and gas: 25-year sales agreement for 10 billion cubic metres a year of gas to be produced from the Shah Deniz field, worth over 100 billion dollars. The agreements will enter into force following the final investment decision on the Shah Deniz Stage 2 development, expected before the end of the year. Last July, on the other hand, TAP shareholders’ structure was reinforced, with new leading energy companies joining the initial partners.
· Step by step we are moving closer to the completion of this major energy project. True, it is not over yet, there are still issues to be addressed, but I am confident that everything will go according to plan and that before the end of the decade gas will flow from the Caspian Sea to Italy along the 3500 kilometres-long pipeline. The Southern Gas Corridor will be a reality.
· It has been quite a ride. In the end, a number of key factors combined to make it possible. Let me mention some of them: 1. The strategic decision of the Azeri government, taken at the highest level, to sell the gas to Europe 2. The determination of the European Commission to diversify energy supply routes 3. The positive attitude of both the United States and Russia 4. The resolve of the Italian government to bring the gas to Italy 5. The strong degree of regional cooperation between countries involved in the project, especially Italy, Greece and Albania.
· The concept of the Southern Corridor had been around for some time, but it was the Baku Joint Declaration of Presidents Aliyev and Barroso, in January 2011, that provided the political framework for the opening of the Corridor: Baku and Brussels committed themselves to establish direct gas delivery routes from the Azeri fields to Europe. I will leave Ambassador Sadiqov to argue the Azeri angle – expansion of its export market, deepening of its relationship with the EU etc. – and I will focus instead on Europe’s motivations, that are the main topic of today’s discussion.
The EU and the Southern Corridor
· The European Union is the largest consumer of gas in the world. It is, to a large extent, dependant on only three countries for its imports: Norway, Russia and Algeria, in that order. Some member States rely almost entirely on a single supplier. Diversification of sources and routes is, therefore, essential to secure sustainable and safe energy supply. In this perspective the Southern Gas Corridor, linking the Caspian gas fields to Europe, is a strategic asset: a new corridor to complement the existing gas corridors of the EU. It will be a dedicated, scalable and legally protected pipeline, capable of accommodating additional volumes of gas, as and when they become available. Eventually, gas from Iraq, the Western Mediterranean and Central Asia could feed into the pipeline. TAP will have to show its contribution to real diversification – and Italy is committed to this objective.
· External energy policy goals are an important part of EU foreign policy. Accordingly, the Commission and the Council have worked hard with the member States and national energy Authorities to put in place well defined technical, regulatory and commercial frameworks, while carrying out a constant dialogue with all non-EU partners involved. I will not delve into the competition between Nabucco and TAP, that for a while opposed member States to member States. This competition undoubtedly complicated the picture, but it is something that now belongs to the past. We must look forward, with the full awareness that the Southern Gas Corridor is a European project, aimed at securing Europe’s energy supply and creating a mutually beneficial and durable political and economic relationship with Azerbaijan and the countries crossed by the pipeline. The new infrastructure will increase wholesale competition and enhance market integration within the EU: we still need to make progress on both fronts. It will also contribute to a shift in the energy mix toward gas, the cleanest of fossil fuels.
· The process of opening the Southern Gas Corridor profited from the quiet support of the United States (here again, TAP was able to overcome initial scepticism) and the “benign neglect” of Russia. Washington maintained in the end strict neutrality on the final selection between the two intra-EU options, while stating repeatedly and publicly that the US stood behind the project of the Southern Corridor. Moscow, on the other, made no objection to the building of a pipeline that would bring non-Russian gas to Europe, probably considering that the Southern Gas Corridor would be no threat to its own much larger European project, South Stream, which – on paper at least – will come into force before SGC. This favourable diplomatic environment – Italy played no minor role in making it favourable, in fact – was conducive to fast progress.
The Italian perspective
· I wish now to spend a few words on the Italian perspective. As most member States, Italy needs to reduce its energy bill, secure a reliable supply of energy and limit the environmental impact of energy production. The price we pay for energy is among the highest in the world and is a negative constraint on our capacity to compete. Diversification will enhance competition and hopefully bring prices down, while preventing shortages and the creation of bottlenecks. New infrastructures will generate private investments and employment opportunities. These are, in my view, enough reasons to be a fan of TAP and the Southern Gas Corridor.
· Italy, however, can also take advantage of its unique geographical position, that makes it a potential gas trading hub for the whole of Southern Europe, as envisaged in our National Energy Strategy. That is why the government – with a modicum of personal involvement – has pursued a determined diplomatic action to bring the gas to Italy: full support to the ITGI project and, subsequently, full support to TAP. This action resulted into a close and effective cooperation with Greece and Albania, but also with other neighbours, such as Croatia, Montenegro, Bosnia (MOU in New York September 2012, IGA in Athens, February 2013, Ministerial meeting TAP-IAP in Dubrovnik June 12, 2013). Once completed, TAP will easily supply gas to Bulgaria through the planned Interconnector Greece-Bulgaria (IGB) and connect to already existing pipelines and planned infrastructures in the region, such as the Ionian Adriatic Pipeline.
· This is important. The Southern Gas Corridor project has strategic geopolitical significance for Europe, because it will improve security of supply, foster trans-border connectivity and help develop regional infrastructures in South East Europe, thus providing an essential contribution to economic and political stability in our immediate neighbourhood.
Diversification is only part of the job.
· Europe has to substantially increase the efficiency of its energy market in order to stay competitive. If it does not, it will find itself more at a disadvantage than it is already. The global energy landscape is changing fast and although it is difficult to tell how it will look in 15-20 years from now, some trends can be clearly identified, such as the profound impact that the shale revolution in North America will have on the world economy. Industrial electricity prices in the US are already less than half the average in Europe and a third of the price in Japan. The effects are visible: the trend of “reshoring” back to the United States manufacturing activities that had gone elsewhere has only just begun, but it is bound to strengthen in the coming decades. Foreign companies in energy-intensive sectors, such a chemicals or steel making, might decide that opening up a plant is more cost-effective in the US than in Europe. This phenomenon could become particularly worrying when/if all barriers to foreign investment in America will be removed thanks to the successful conclusion of the negotiations for the Transatlantic Trade and Investment Partnership (TTIP).
· One more point to consider: as the production of unconventional oil and gas in America continues to rise, the United States will become a net exporter of energy. So far only four licences to export LNG have been granted, but there are at least 20 more applications in the pipeline and more will follow. By 2020, according to Foreign Affairs, the US could be the second-largest exporter of LNG, next to Qatar. Price-wise this would make no difference to Europe, once the costs for liquefaction, transport and regasification are added (although it would be good news for those who want to diversify their supply); on the other hand it would definitely make a difference to Asian companies in China, Japan, Korea, who would find American LNG attractive in spite of the added costs and acquire a new competitive edge vis-à-vis their European competitors. European companies could find themselves between the American anvil and the Asian hammer.
· The opening of the Southern Gas Corridor must therefore be seen, in my view, as part of a larger picture, one piece of a puzzle that should include the smooth implementation of the Third Energy Package, the completing of the internal market, the definition of a coherent political and legislative environment for energy investors beyond 2020, the harmonization of subsidies and support schemes for renewables, the modernization of existing infrastructures and the identification of financial means to promote research and technological innovation. The final goal is to create the world’s largest and more competitive energy market.
