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Azerbaijan Boosts Gas Supplies to European Markets

By Ilham Karimli February 6, 2023

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Participants of the 9th Southern Gas Corridor Advisory Council Ministerial Meeting and 1st Green Energy Advisory Council Ministerial Meeting, February 3, 2023 / President.Az

Azerbaijani President Ilham Aliyev recently spoke about Baku’s new role in diversifying gas supplies in Europe as energy security remains at the forefront of national and regional energy policies.

The president’s remarks at the 9th Southern Gas Corridor Advisory Council Ministerial Meeting presented a detailed overview of how Azerbaijan works toward assisting European policymakers to enable sustainable energy supplies.

“The world has changed. Energy security issues have become more and more important for every country … Energy security is really a matter of national security. And all that our joint efforts have done with respect to building new routes and engaging new sources now seem to be much more needed than ever before,” President Aliyev was quoted by President.Az as saying in his opening speech.

According to President Aliyev, the new reality reflects a significant need for continued diversification of energy supplies, for which Azerbaijan is ready and willing to supply more natural gas to Europe by 2027.

“We talk about the expansion of TANAP from 16 to 32 billion cubic meters and the expansion of TAP from 10 to 20. So, we plan by 2027 to double our gas export to Europe, and this is doable because we have resources,” he said, referring to the Memorandum of Understanding signed in June 2022 with the European Commission on increasing Azerbaijani gas deliveries.

TAP and TANAP form part of the Southern Gas Corridor (SGC) mega gas pipeline supplying Türkiye and European Union with Azerbaijani gas since the end of 2020. The contracted annual capacity of TAP and TANAP is 10 billion cubic meters (bcm) and 16 bcm per year, respectively.

The 3,500-kilometer-long SGC pipeline strengthens European energy security, diversifying its energy supplies and boosting decarbonization efforts by providing an uninterrupted flow of Azerbaijani natural gas. The Southern Gas Corridor, defined as one of the world’s most complex and expensive pipelines built to date, is a unique energy route that carries natural gas from the Caspian Sea reserves directly to the European marketplace. The main source of natural gas for the SGC is Azerbaijan’s offshore Shah Deniz field, with an estimated proven reserve of 1.2 trillion cubic meters.

President Aliyev said vast natural reserves, which are estimated at over 2.6 trillion cubic meters of gas, allow Azerbaijan to increase gas exports as seen in year-on-year statistics since the end of 2020.

“Our natural gas export is growing. In 2021, it was around 19 billion cubic meters. Last year it was 22.6. And this year, we expect 24.5. So that means that the MOU with the European Commission is successfully implemented. We not only increase production, but we also increase export, and we expand the geography,” he said, referring to agreements with new European countries for gas exports on SGC.

New buyers of Azerbaijani gas

In December 2022, Azerbaijan and Romania signed an agreement that put the latter among the buyers of Azerbaijani gas. In January, Romania started receiving Azerbaijani gas. Until April 1, a total of 300 million cubic meters of gas will be supplied to the southeast European country. Baku and Bucharest signed a new agreement for more gas supplies during the 9th Southern Gas Corridor Advisory Council Ministerial Meeting last week. Under the agreement, Romania will receive up to 1 bcm of gas from Azerbaijan in 2023-2024.

Hungary followed in the footsteps of Bucharest to secure a similar deal in January to purchase Azerbaijani gas. Hungary has been in talks with Azerbaijan for purchasing gas since early last year. The country’s state-owned energy group MVM has been negotiating with Azerbaijan’s state energy company SOCAR on starting gas imports via Southern Europe from the end of 2023, Hungarian Foreign Minister Peter Szijjarto said last year.

The next new European buyer of Azerbaijani gas is Serbia. Serbian President Aleksander Vučić said during his Baku visit in December 2022 that Belgrade can get natural gas from Azerbaijan after the gas interconnections – Bulgaria-Serbia and Serbia-North Macedonia – are finished. Construction was launched on the Bulgarian section of the gas interconnector Serbia-Bulgaria on February 1, 2023. The project is said to enable Serbia to diversify gas supplies, reduce the dominance of Russian gas in the Serbian market, and provide alternative supply routes in South-East Europe. Serbian Minister of Mining and Energy Dubravka Dzhedovich said the construction of the Bulgaria-Serbia gas interconnector will be completed in the autumn of 2023 to enable the first gas supplies from Azerbaijan at the beginning of 2024.

Officials in Azerbaijan have previously revealed the country’s intention to put two new gas fields into operation in response to the growing demand for natural gas in global markets. The new reserves are expected to add a significant portion to the current volumes reaching European consumers.

One of the country’s biggest gas condensate fields, dubbed “Absheron,” is expected to be put into operation and produce 1.5 billion cubic meters per year in its first phase. The other big fields with untapped potential are “Babak” with estimated reserves of 400 billion cubic meters and “Umid” with at least 200 billion cubic meters.

Azerbaijani authorities have previously confirmed 2.6 trillion cubic meters of proven natural gas reserves, which they believe can supply foreign partners for decades to come.