BAKU, Azerbaijan, July 20. The memorandum of understanding signed on July 18 between the European Union and Azerbaijan on energy will start yielding positive results in 1.5-2 years, Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY, and Global Head Strategy Risk at Berry Commodities told Trend.
He pointed out that the EU-Azerbaijan deal is significant, as Europe will need additional volumes for the next two decades to come.
“Without any doubt demand for natural gas will stay strong, even during the energy transition, or maybe even thanks to the energy transition and its major constraints at present. The deal is timely and was expected to happen. If it will have a positive effect in 2022 or 2023 is still very unclear, as the deal and its implementation will take a long period, maybe even 1.5-2 years. For the EU Azerbaijan and its hinterland is very important, as it is close by, reasonably stable and has a lot of natural resources reserves,” added Widdershoven.
Under the agreement, the sides aspire to support bilateral trade of natural gas, including through exports to the European Union, via the Southern Gas Corridor, of at least 20 billion cubic metres of gas annually by 2027, in accordance with commercial viability and market demand.
Moreover, they endeavour to encourage financing of the expansion of the Southern Gas Corridor pipeline network taking into consideration the EU’s climate policies and its REPowerEU strategy, including through cooperation with international financial institutions.
EU and Azerbaijan will support infrastructure, to the extent possible, to be conversion-ready with a view to transporting renewable gases, including hydrogen and its derivatives, so as to avoid lock-in of resources. This entails that new infrastructure should be capable of carrying renewable and low-carbon gases, including hydrogen and its derivatives, as well as making existing infrastructure future proof and hydrogen ready. The sides endeavour to promote mutually beneficial natural gas trade, anticipating future trade in hydrogen, hydrogen-derivatives and other renewable gases (bio-methane, etc.), and renewable electricity.
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