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Southern Gas Corridor to boost Azerbaijan’s export earnings - Capital Economics

Oil&Gas Materials 9 February 2021 09:21
Southern Gas Corridor to boost Azerbaijan’s export earnings - Capital Economics

BAKU, Azerbaijan, Feb.9

By Leman Zeynalova – Trend:

The main benefits of the Southern Gas Corridor to Azerbaijan are that it enables an increase in natural gas production and exports, which in turn will boost export earnings, Samuel Burman, Assistant Commodities Economist at UK-based Capital Economics research and consulting company told Trend.

It could also improve the country’s diplomatic relations with Europe, he added.

“Meanwhile, the benefits of this Corridor to Europe are that it offers Europe another alternative to natural gas from Russia and, by increasing competition, could lead to lower European gas prices. However, it is worth stressing that Russia will remain by far the largest gas supplier to Europe for the foreseeable future as its pipelines have much greater capacity.

What’s more, the development of alternative gas routes, such as Nord Stream II and the EastMed pipeline, could weigh on Azerbaijan’s natural gas exports later this decade once/if they come on stream. As a result, the dividends from the Southern Gas Corridor to Azerbaijan may diminish over time,” Burman believes.

Following the start of commercial operations on November 15, 2020, the Trans Adriatic Pipeline (TAP) AG confirmed on Dec. 31 the commencement of gas flows from Azerbaijan. The first gas has reached Greece and Bulgaria, via the Nea Mesimvria interconnection point with DESFA, as well as Italy, via the Melendugno interconnection point with SNAM Rete Gas (SRG).

TAP transports natural gas from the giant Shah Deniz field in the Azerbaijan sector of the Caspian Sea to Europe. The 878 km long pipeline connects with the Trans Anatolian Pipeline (TANAP) at the Turkish-Greek border in Kipoi, crosses Greece and Albania and the Adriatic Sea, before coming ashore in Southern Italy.

As a key part of the Southern Gas Corridor, TAP is strategically and economically important to Europe and essential in providing reliable access to a new source of natural gas. TAP plays a significant role in boosting Europe’s energy security, supply diversification, as well as decarbonisation objectives.

TAP’s shareholding is comprised of bp (20%), SOCAR (20%), Snam (20%), Fluxys (19%), Enagás (16%) and Axpo (5%).

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Follow the author on Twitter: @Lyaman_Zeyn

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