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Azerbaijan Boosts Natural Gas Exports to European Markets

By Nigar Bayramli May 25, 2023

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European Commission President Ursula von der Leyen and Azerbaijan's President Ilham Aliyev sign a Memorandum of Understanding to boost Azerbaijani gas supplies to Europe, July 18, 2022 / President.Az

Azerbaijan delivered a total of 6.5 billion cubic meters (bcm) of gas to foreign markets in the first quarter of this year, including 2.9 bcm to Europe, 2.7 bcm to Türkiye, and 0.9 bcm to Georgia.

In March 2023, European markets received nearly 612 million cubic meters of natural gas from Azerbaijan, generating about €596 million in revenues for Azerbaijan during the reporting period.

Azerbaijan has been supplying natural gas to Europe through the Trans Adriatic Pipeline (TAP) since December 31, 2020. TAP is the final segment of the Southern Gas Corridor (SGC) and spans 773 kilometers onshore and 105 kilometers offshore, starting at the Turkish-Greek border and reaching its final destination in Italy, traversing Greece and Albania.

The SGC consists of three segments, spanning seven countries and six regulatory systems. It links 11 different investors and supplies 12 different gas buyers, primarily in Europe. The initial annual transportation volume of the pipeline is 16 bcm, shared between Türkiye and Europe, with 6 bcm and 10 bcm, respectively. The main source of natural gas for the SGC is Azerbaijan’s offshore Shah Deniz field, which has an estimated 1.2 trillion cubic meters of proven reserves.

Currently, the European market accounts for the largest share of daily gas exports from Azerbaijan, with European consumers supplied with approximately 27 million cubic meters of Azerbaijani gas per day.

In 2021, Europe received 8 bcm of gas from Azerbaijan, which increased to 11.4 bcm in 2022.

During his recent visit to Lithuania, President Ilham Aliyev announced that the supply of blue energy to Europe would reach 12 bcm this year and is expected to reach 20 bcm by 2027.

“In July [of 2022], the European Commission and Azerbaijan signed a Memorandum of Understanding on strategic partnership in the field of energy. Based on this memorandum, we are supposed to double our natural gas supply to Europe until 2027,” President Aliyev said in a joint press conference with his Lithuanian counterpart Gitanas Nausėda on Monday. 

He further emphasized that the confirmed volume of supplies for the upcoming year is just the minimum, given Azerbaijan’s vast resources.

“We are producing more natural gas from existing fields. Very soon, we will announce significant production from one of the big fields of the Caspian. And also, investments in renewables will allow us to save natural gas for export,” the president explained, referring to Azerbaijan’s proven gas reserves of 2.6 trillion cubic meters.

Azerbaijan’s significant gas condensate fields include the “Absheron” field, which is expected to be operational and produce 1.5 billion cubic meters per year in its first phase. Other notable fields with untapped potential are the “Babak” field with estimated reserves of 400 billion cubic meters and the “Umid” field with at least 200 billion cubic meters.

In addition to the existing markets, countries such as Hungary, Slovakia, Montenegro, North Macedonia, Bosnia and Herzegovina, Croatia, and Serbia are exploring the possibility of receiving gas from Azerbaijan.

Bulgaria has already secured the import of 3 bcm of Azerbaijani gas per annum after launching the Greece-Bulgaria Interconnector in October 2022.