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Azerbaijan reliable gas exporter, regional hub amid global cataclysms

Southern Gas Corridor

The current global situation has demonstrated to everyone that diversifying transportation routes and gas supplies is critical in the face of rising geopolitical conflict and tension.

An unexpected cold spell in Europe has put the continent’s countries in a difficult position. Because their gas storage facilities were nearing capacity, the weather forced them to restart drawing fuel. The countries that are Azerbaijan’s partners in the Southern Gas Corridor are in the best position in this regard.

Gas supplies to Europe via SGC

With the completion of the TAP (Trans-Adriatic Pipeline) construction on December 31, 2020, Azerbaijan began commercial gas supplies to Europe via the Southern Gas Corridor. The European Commission’s Southern Gas Corridor initiative aims to build a natural gas supply route from the Caspian and Middle Eastern regions to Europe.  The route from Azerbaijan to Europe consists of the South Caucasus Pipeline, the Trans-Anatolian Pipeline (TANAP), and TAP.

In 2021, TAP transported 8.1 billion cubic meters of gas to Europe. By late 2022, Azerbaijan plans to increase gas supplies to Europe to 9.1 billion cubic meters, and in 2023 the volume of gas supplies is expected to reach 11 billion cubic meters.

Today, the final work on the Interconnector Greece-Bulgaria (IGB), which will transport natural gas from Azerbaijan to Bulgaria, is in full swing. Gas was supposed to start flowing via IGB back in 2020, but the project’s implementation has been delayed for a variety of reasons.

The serious energy crisis of last fall and the emerging problems associated with the situation in Ukraine have compelled many to take the issue more seriously.

Trans-Caspian gas pipeline

The Trans-Caspian Gas Pipeline, designed to bring Turkmen gas to Europe, is back on the agenda now.

The Trans Caspian Resources company will build the interconnector, which will connect the Banka Livanova field on the Turkmen shelf of the Caspian Sea with the Azeri-Chirag-Guneshli field, from which Turkmen gas will be pumped via an underwater pipeline to the Sangachal terminal and transported to the Southern Gas Corridor.

However, the company has not yet found the finances for this project and many other issues have not been resolved.

It is worth noting that Azerbaijan has repeatedly offered to construct a connecting pipe and transport Turkmen gas through the Azerbaijani pipeline system. This was hampered by the absence of legal status for the Caspian Sea, a lack of solidarity among the partners, and financial uncertainty.

The company’s plans for the Caspian interconnector raised a number of questions, the most important of which is whether Azerbaijan is prepared to provide its gas transportation system to Turkmen gas while putting aside plans to increase its own natural gas production.

“Turkmenistan, the world’s fourth-largest gas reserve country, wishes to export its resources to the West via an alternative route. That is understandable. The advantage for Azerbaijan is that this gas will be transported to regional and European markets via our country’s gas transportation system,” said energy expert Ilham Shaban to Day.az.

He recalled that when Azerbaijan established the Southern Gas Corridor, it stated that it would not close the infrastructure; it is open, and countries with free volumes of gas that want to sell them on western markets can use it.

“But not in unlimited quantities, but in the volume of opportunities provided by the pipeline that are not contrary to our commercial interests,” he said.

The Southern Gas Corridor’s total capacity is 31 billion cubic meters up to Europe’s borders and lower [20 billion cubic meters]. It is currently transporting 10 billion cubic meters of gas within the framework of Shah Deniz-2.

“We can export additional 10 billion cubic meters of gas to the European markets within the framework of Absheron-2. This field has 350 billion cubic meters of gas, of which only 50 billion will go to the domestic market and the remaining 300 billion can go to European buyers if the EU lifts the limit on one exporter,” Shaban said.

The expert added Europe appears to be planning to abandon gas completely by 2050, and that Azerbaijan is interested in selling the available volumes of gas before that date.

“If we sign a development contract in 2025, it will take us five years to deliver gas to markets and the same amount of time to expand. If we divide Absheron’s reserves by the remaining years, we get approximately 10 billion cubic meters per year. And it will be the volume reserved at the project’s inception in 2013, to transport all of our gas to Europe,” he explained.

“As a result, we should not be overly enthusiastic about the Trans-Caspian Interconnector, but consider the issue from the standpoint of commerce, economics, and numbers,” he added.

Last November, the Azerbaijani government published medium-term forecasts for oil and gas production in the country until 2026. According to the forecasts, about 48 billion cubic meters of gas will be produced in 2023, 49 billion in 2024, and about 50 billion cubic meters in 2025.

These figures tell that Azerbaijan’s role as a gas exporter to Europe will only increase.

By Ayya Lmahamad

About Fidan Abdullayeva