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Weekly review of main events in Azerbaijan's energy market

Economy Materials 15 October 2022 18:02 (UTC +04:00)
Weekly review of main events in Azerbaijan's energy market
Maryana Ahmadova
Maryana Ahmadova
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BAKU, Azerbaijan, October 15. Important statements on the demand for Azerbaijani gas in Europe were made this week, Trend reports.

So, Prime Minister of Moldova Natalia Gavrilița said that supplies of Azerbaijani gas are in big demand and in these terms the country counts on Azerbaijan as a reliable partner.

Besides, this week European Commission President Ursula von der Leyen said this week regarding the Greece-Bulgaria interconnector (IGB), which transports Azerbaijani gas, that the launch of this pipeline opens access to reliable energy sources.

Meanwhile, the EU Commissioner for Energy Kadri Simson said that the Greek-Bulgarian interconnector (IGB) is a Project of Common Interest, and EU considers this interconnection as a crucial piece of infrastructure needed to diversify South East Europe and strengthen the internal energy market.

For example, a wholesale price of natural gas for October in Bulgaria was set at 233.36 levs ($116.93/119.31 euro) per MWh, a month-on-month drop of 34 percent, and the prices will continue to lower in November.

Turkish President Recep Tayyip Erdogan stated this week that Türkiye, together with Azerbaijan, has begun work to increase the throughput capacity of Trans-Anatolian Gas Pipeline (TANAP), a part of the Southern Gas Corridor (SGC), to 32 billion cubic meters.

The Trans Adriatic Pipeline (TAP), another part of SGC, has already increased gas supplies to Italy by 60 percent [year-on-year], meeting over 14 percent of the country’s demand for the fuel, Managing Director of TAP Consortium Luca Schieppati said.

According to him, the expansion of TAP capacity will take place by the end of 2027.

In the outgoing week, Azerbaijani Energy Minister Parviz Shahbazov said that Azerbaijan’s gas supplies to Europe stood at 8.3 billion cubic meters from January through September 2022, which is growth of 22.6 percent year-on-year.

According to Shahbazov, during the reporting period, the country exported 6.1 billion cubic meters to Türkiye and 1.9 billion cubic meters to Georgia.

Overall, Azerbaijan exported 16.3 billion cubic meters of gas, or 47.4 percent of the total volume (34.4 billion cubic meters) of gas produced in the country in the first nine months of this year, the minister added.

Meanwhile, according to him, Azerbaijan exported 19.7 million tons or 80 percent of oil produced in the country from January through September 2022, which is increase by 8.6 percent compared to the same period of 2021.

Besides, a number of international organizations have published forecasts for oil production in Azerbaijan.

So, the US Energy Information Administration (EIA) forecasted that petroleum and other liquids production in Azerbaijan will stand at 0.67 million barrels per day in 2022.

According to the EIA, Azerbaijan is expected to produce 0.64 million barrels per day in 2023.

The forecast of the International Energy Agency (IEA) for oil production in Azerbaijan for 2022 didn’t differ from the expectations of the US Department of Energy, however, the IEA believes that in 2023 Azerbaijan will produce more of this fuel - 0.67 million barrels per day.

This week, SOCAR Energy Ukraine company [affiliate of the State Oil Company of Azerbaijan] delivered fuel from Azerbaijan to Ukraine through Bulgaria for the first time.

According to director of the company's retail division Igor Orlov, the company does not deliver fuel from Azerbaijan directly.

“We have been working with Orlen since the first day of our business in Ukraine. We had to look for alternatives due to the lack of necessary volumes of fuel in Europe. This year we for the first time delivered fuel from Azerbaijan through Bulgaria. We also supplied fuel from Italy,” he said.

An important statement was also made regarding the gasification of the liberated territories of Azerbaijan this week.

So, General Director of Azeriqaz Production Union Ruslan Aliyev said that design work has been completed in connection with the gas supply of the above territories, but the launch date of the work on laying gas lines is still unknown.

As for the renewable energy sector, this week Azerbaijan and Switzerland discussed cooperation in this area. Chairman of the Management Board of Azerbaijan Small and Medium Business Development Agency (SMBDA) Orkhan Mammadov met up with CEO of Kromatix SA Swiss Company, member of the Swiss-Azerbaijani Chamber of Commerce and Industry Rafic Hanbali.

During the meeting, an exchange of opinions on prospects in alternative energy field was held.

Besides, the Ministry of Foreign Affairs of Spain said that Spanish companies engaged in renewable energy could be of great use in increasing cooperation in this field with Azerbaijan.

According to the ministry, Spain sees bright prospect in cooperation with Azerbaijan through Memorandum of Understanding in the field of energy signed between the EU and Azerbaijan, not only because the Spanish Enagas company has a significant participation in the Trans-Adriatic Pipeline (TAP), a segment of the Southern Gas Corridor (SGC), but also because this agreement contemplates the development of renewable energy in Azerbaijan.

International Finance Corporation (IFC) noted this week that Azerbaijan has the potential to install seven gigawatts of offshore wind power by 2040, with the right long-term vision, infrastructure development, investment, and policies.

According to IFC, the estimated technical potential of Azerbaijan’s offshore wind potential is 157 gigawatts, which is massive when compared to the country’s current total installed capacity of around eight gigawatts.

At the same time, IFC said that it looks forward to supporting Azerbaijan on its path towards diversification and decarbonization through sustainable private sector investments.

Speaking about renewable energy potential in Azerbaijan’s liberated territories, Executive Director of the Center for Economic Reforms Analysis and Communication Vusal Gasimli noted this week that Karabakh and Eastern Zangazur Economic Regions have the renewable energy potential, including the power of water, wind, and solar power, in the amount of over 10,000 megawatts.

Meanwhile, an important statement was also made about the potential for hydrogen production in Azerbaijan. So, Deputy Director of the State Agency for Renewable Energy Sources under Azerbaijani Energy Ministry Kamran Huseynov said Azerbaijan is working with the European Bank for Reconstruction and Development (EBRD) will present a strategy of hydrogen production development in the near future.

According to him, in the beginning of this year, EBRD-selected Advision consulting company has already provided project plan, and this project, consisting of a country report and thematic blocks, will be submitted by Advisian by the end of 2022.

Follow the author on Twitter: @mariiiakhm

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