BAKU, Azerbaijan, June 10. Gas production in Azerbaijan is set to grew by additional 7 percent through 2026, Trend reports.
In a stark contrast to the oil sector, Azerbaijan's gas industry is displaying robust growth.
The inauguration of production at the Shah Deniz II gas field in 2018, along with the successful operation of two interconnected pipelines—the Trans-Anatolian Natural Gas Pipeline and the Trans Adriatic Pipeline—providing gas to Türkiye and Europe respectively, have significantly contributed to this positive outlook.
As a result, S&P Global Ratings estimates that Azerbaijan's gas production witnessed a remarkable 90 percent surge, reaching 34 billion cubic meters (bcm) between 2017 and 2022.
Despite this recent upward trend in gas production, experts suggest that gas exports are projected to play a relatively modest role in Azerbaijan's economy when compared to oil. It is unlikely that the increased gas production will fully compensate for the decline in oil production. Furthermore, it is important to note that European gas prices have substantially moderated since the elevated levels witnessed in the latter half of 2022, and have even dipped below the pre-Russia-Ukraine war levels.
Analysts anticipate that the majority of the production ramp-up from the second phase of the Shah Deniz gas field has already taken place, leading to a modest projected increase of approximately 7 percent in gas output by 2026. The primary South Caucasus Pipeline is currently operating near its full capacity, making it necessary to expand the pipeline infrastructure in order to accommodate any future net gas exports, including those to Europe.
While Azerbaijan's gas sector demonstrates resilience and potential, it faces challenges in terms of its economic impact and the need for further infrastructure development to sustain export growth. The country will continue to navigate the complex dynamics of the global energy market as it strives to balance its reliance on both oil and gas resources.
Azerbaijan began gas exports to Europe via the Southern Gas Corridor on December 31, 2020. The Trans Adriatic Pipeline (TAP), the European leg of the Corridor, has transported 4.5 billion cubic meters of gas in the first five months of 2023.
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