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Southern Gas Corridor’s expansion: where is quick source of gas?

Oil&Gas Materials 29 November 2022 17:11 (UTC +04:00)
Southern Gas Corridor’s expansion: where is quick source of gas?
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, Nov.29. Boosting the supply of Azerbaijani gas to Europe needs 3 things: transport infrastructure (ie, expansion of the SGC); supply (ie production); the necessary commercial architecture, Julian Bowden, Senior Visiting Research Fellow at Oxford Institute for Energy Studies (OIES) told Trend.

“Behind all this is finance and political will along the whole of the SGC. The main question analysts are asking today is this “fine, the MOU with the EU is a good start, but where is the production to feed into the SGC expansion in the next few years”. At the moment, Azerbaijan needs gas imports to make its gas balance work. Azerbaijan has domestic commitments and export commitments; without gas imports one or both of these commitments will be affected. (We now have production data for 9 months, import data for TAP and Turkey…….the balance looks like it needs 1-2 bcm in order to work. This is the context for the swap imports from Turkmenistan, and the recent 1 bcm deal with Russia). Again, the clear source of quick gas for Azerbaijan and the SGC is Turkmenistan,” he explained.

The expert pointed out that SE Europe is in a gas deficit – it needs imports in order to meet demand.

“Traditionally, most of the imports came from Russia. But in the last few years, other supply options have opened up – LNG and the SGC. More LNG terminals are planned (there is very high probability that Alexandroupolis in northern Greece will be ready sometime in mid-2023, for instance). So the SGC gas does have competition from LNG. If we look into the medium term, it also has competition from Black Sea production. In other words, the SGC is important, but unless it can demonstrate that there is gas and it can be delivered, then it will miss this opportunity as SE Europe looks to have alternatives to its traditional Russian supplies.

Azerbaijan does have a role, clearly, but it needs to be very clear in saying very soon where this gas will come from. And, it might need to be flexible on commercial terms. The days of the 25-year long-term contract are probably over,” Bowden concluded.

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