Time comes for Azerbaijani gas to lead European energy market

Economy Materials 27 November 2022 08:00 (UTC +04:00)
Time comes for Azerbaijani gas to lead European energy market
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, November 27. The need for Azerbaijani gas in Europe, where there is currently an acute energy crisis, is growing rapidly, Trend reports.

As President of Azerbaijan Ilham Aliyev said on November 25 at the international conference under the motto "Along the Middle Corridor: Geopolitics, Security and Economics", after the outbreak of war between Russia and Ukraine, applications were received from more than 10 European countries with a request to either increase or start gas supplies. Today, gas exports from Azerbaijan amount to approximately 22 billion cubic meters, more than 50 percent of which is supplied to the European countries.

At the moment, Azerbaijani gas supplies are carried out under already signed contracts, which indicate specific volumes. In order to meet the growing demand in the market, it is necessary to increase gas production, which is impossible without new agreements. Azerbaijan has great potential to increase gas production from such gas fields as Absheron, Umid, Babek, Asiman, Shafag and others.

To expand the geography of Azerbaijani gas supplies, the construction of additional pipelines is required, one of which is the Interconnector Greece-Bulgaria (IGB) that was commissioned on October 1, 2022. Thanks to this pipeline, the wholesale price of gas in Bulgaria fell by 34 percent at once. This is a clear example of how gas supplies from Azerbaijan, in addition to satisfying needs, increase competition in the market, thereby contributing to lower prices, which is so important for the European consumer at the moment.

The interconnector between Bulgaria and Serbia, which will allow Serbia to get access to Azerbaijani gas, is scheduled to be launched in 2023. The country already wants to sign a relevant contract with Azerbaijan without waiting for the infrastructure to be ready. Albania is also among the countries interested in importing Azerbaijani gas, and, currently, is a transit country for the Trans-Adriatic Pipeline (TAP).

Another important project in this regard is the Ionian-Adriatic Pipeline (IAP), which, by connecting to TAP, should supply gas to Bosnia and Herzegovina, Montenegro, Croatia, Hungary, North Macedonia, and other countries interested in getting access to Azerbaijani gas, due to higher energy vulnerability.

However, the most important issue which needs to be resolved in order to increase the supply of Azerbaijani gas to Europe is, of course, the expansion of the capacity of the Southern Gas Corridor (SGC).

President Ilham Aliyev stressed that this will require a consolidated position and investment by all shareholders.

“We need to expand the existing pipeline system which also is brand new. We just completed less than two years ago the final segment of the Southern Gas Corridor Trans Adriatic Pipeline (TAP) but already today, we see the demand to expand the capacity twice from ten to twenty bcm. That will need, of course, a consolidated position and investments of all shareholders,” Ilham Aliyev said.

“Azerbaijan has only twenty percent share in TAP. Therefore, we hope with partners we will get to that point, and also expansion of TANAP from 16 to 32 billion cubic meters. Because capacity of TANAP is almost fully engaged. So, all that will need, of course, additional investments. Of course for that we will need to have the arrangements of transit with our Turkish colleagues. Without that it will not be possible to satisfy the needs of European consumers and also growing needs of Turkish consumers,” the president added.

Thus, Azerbaijan has the potential and the desire to supply more gas to Europe and ensure the energy security of the continent, and the European countries, as it’s seen, are striving to expand partnership with Azerbaijan, which has proven its reliability more than once. However, in order to turn the desired into reality, substantive commercial negotiations are needed now, backed up by concrete steps, since increasing gas production and expanding existing infrastructure also require a certain amount of time.