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Azerbaijani Gas is Bridging the Supply Gap in Europe


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By Eurasianet ↗ – Dec 19, 2023, 4:00 PM CST

  • Azerbaijan plans to increase its gas exports from 8 billion cubic meters in 2021 to 20 billion cubic meters by 2027.
  • This expansion requires increased gas production and capacity enhancement of the Southern Gas Corridor pipelines.
  • Challenges include securing purchase agreements with European buyers and competing with flexible LNG exports.

Azerbaijan is on target to double its gas exports to Europe by 2027, according to President Ilham Aliyev.

Speaking at the inauguration ceremony for the Bulgaria-Serbia interconnector gas pipeline in Niš, Serbia, on December 10, Aliyev confirmed that Baku will meet its promise to Brussels to double its gas exports to Europe to 20 billion cubic meters a year by 2027.

“The numbers already show that we are confidently moving towards this goal,” Aliyev said, explaining that Azerbaijan exported just over 8 billion cubic meters of gas to Europe in 2021 which will rise to “about 12 billion cubic meters” for this year. 

“This will account for 50 percent of Azerbaijan’s total gas exports,” he said. 

To double gas exports to Europe, Baku has to both increase gas production and increase the capacity of the three transit pipelines that make up the Southern Gas Corridor, which carries Azerbaijani gas from the Caspian Sea to European markets. 


The Southern Gas Corridor (Wikimedia Commons)

Azerbaijan’s gas production and exports are both rising.

Data released on December 13 shows production for January-November reaching 44 billion cubic meters, up 3.5 percent on the same period in 2022, with exports over the same period totaling 22 billion cubic meters, up 9.5 percent. 

Some projects aimed at further boosting production are underway.

TotalEnergies, which began producing gas from Azerbaijan’s Absheron gas field in July, confirmed in September that it will lift production from 1.5 billion cubic meters a year to around 5.5 billion cubic meters a year.

Meanwhile, BP, which operates Azerbaijan’s main Shah Deniz gas field and ACG oil field has begun drilling deep wells into what it hopes are major reserves beneath both existing fields and Azerbaijan’s state oil company SOCAR has hopes of boosting production from its Umid gas field. 

But the huge investment needed to bring new gas production online and to expand the pipelines has to be balanced by agreements with gas buyers in Europe, confirming that they will buy the gas when it is available.

To date that hasn’t happened, with Azerbaijani officials complaining that European buyers have been slow to commit to purchasing the extra gas that Azerbaijan has promised Brussels it will supply by 2027.

Some export agreements have been signed. 

Next year will see Bulgaria import 1 billion cubic meters of Azerbaijani gas, double the 500 million cubic meters supplied this year¸ while a new agreement with Belgrade will see SOCAR export 400 million cubic meters of gas to Serbia next year, via the new Bulgaria-Serbia interconnector. 

However, the major European gas buyers further west have yet to commit

It’s not clear why. Azerbaijan’s September military offensive to seize Nagorno-Karabakh, which resulted in the emptying of the region’s Armenian population, was not received well by the EU, in particular by some member states like France. There’s been no indication that this has had an impact on European interest in buying Azerbaijani gas, however. (TotalEnergies, France’s biggest energy company, continues to operate its Absheron field.)

In January this year the operator of the Trans Adriatic Pipeline (TAP) which carries Azerbaijani gas from the Turkey-Greece border, through Albania and on to Italy, held an open tender for buyers to book extra pipeline capacity for gas they planned to import

TAP confirmed it had received commitments for only an extra 1.2 billion cubic meters a year, considerably less than the 10 billion cubic meters needed to double Azerbaijan’s exports to Europe to 20 billion cu m/yr.

A second tender planned for later in 2023 has not materialized. 

At the same time, there has been no confirmation of any work to expand either the South Caucasus gas Pipeline (SCP) which carries Azerbaijani gas from Azerbaijan to Turkey or the TANAP pipeline which carries the gas across Turkey to Greece.

The combined capacity of both will have to be expanded by at least 10 billion cubic meters a year if Baku’s promise to double exports to Europe to 20 billion cubic meters a year by 2027 is to be met. 

That promise, made in July last year in a landmark agreement with the European Union, came in the wake of Russia’s invasion of Ukraine which has seen Russian gas exports to Europe fall to zero and saw European gas prices surge to unprecedented levels. 

(The political aim of reducing EU dependence on Russian gas was arguably undermined a few months later, when Azerbaijan began purchasing Russian gas to meet its own needs.) 

Subsequently, however, Europe’s gas situation has eased with new liquefied natural gas (LNG) import terminals being commissioned across the continent and major LNG exporters such as the U.S. and Qatar working to increase exports.

Increasingly Azerbaijan’s gas exports, which can only be made via the Southern Gas Corridor pipelines, are having to compete with more flexible LNG exports, delivered by sea to floating terminals which can easily be moved to different locations according to demand. 

And with efforts to boost Azerbaijani production to the required levels still in the early stages, Baku is unable to confirm exactly how much more gas will be available and when. 

Other possibilities

Baku does have some other options which could boost the volume of gas available for export.

Baku has ambitious plans for renewable power generation, which, if realized, will greatly reduce domestic gas consumption.

Speaking in Niš, Aliyev confirmed that his government has signed agreements for the development of 10 gigawatts of renewable power-generating capacity.

How much of that will actually be developed, and when, remains to be confirmed.

Azerbaijan’s latest power generation data, released on December 15, shows that 93 percent of the republic’s power is still generated by thermal power plants – mostly burning gas, with just 7 percent coming from renewables. 

Another option open is for Baku to import more gas to meet domestic needs, allowing it to increase exports, or to transit gas from other countries directly.

Recently revived interest in the development of a pipeline across the Caspian to carry gas from Turkmenistan to Europe, already appears to have cooled. 

However, Azerbaijan’s existing deal under which it imports gas from Turkmenistan via Iran could be further expanded with Tehran signalling earlier this year that it was expanding its pipeline capacity in readiness for further transit. 

That extra pipeline capacity could also be used to supply Turkey. 

A recent meeting between Turkish and Turkmen officials resulted in an agreement for the two sides to explore the possibility of Turkey also importing Turkmen gas via Iran.

If realized, that could reduce Ankara’s dependence on Azerbaijan, which last year supplied Turkey with 8.7 billion cubic meters of gas, 16 percent of Turkey’s imports, again freeing up more Azerbaijani gas for export to Europe. 

However, such a move would also require a new agreement between Ankara and Tehran over Turkey’s existing deal to import 9.6 billion cubic meters a year of Iranian gas which expires in July 2026. 

By David O’Byrne via Eurasianet.org

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Eurasianet is an independent news organization that covers news from and about the South Caucasus and Central Asia, providing on-the-ground reporting and critical perspectives on…

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