{"id":11685,"date":"2024-08-23T07:41:19","date_gmt":"2024-08-23T07:41:19","guid":{"rendered":"https:\/\/roydadnaft.ir\/English\/?p=11685"},"modified":"2024-08-23T07:41:19","modified_gmt":"2024-08-23T07:41:19","slug":"can-azerbaijan-meet-its-pledge-to-double-gas-exports-to-europe","status":"publish","type":"post","link":"https:\/\/roydadnaft.ir\/English\/11685\/","title":{"rendered":"Can Azerbaijan Meet Its Pledge to Double Gas Exports to Europe?"},"content":{"rendered":"

RoydadNaft – <\/a><\/span>\u00a0Azerbaijan is on pace to meet its natural gas export target this year. But Baku still has a long way to go before the country can meet its ambitious export commitments for 2027.<\/span><\/p>\n

Touting Azerbaijan as a “reliable supplier,” President Ilham Aliyev <\/span>announced<\/span><\/a> at a political conference in the UK in July that the country’s annual export volume for this year was projected to increase by over 10 percent of 2022’s total, reaching almost 13 billion cubic meters (bcm) of gas.<\/span><\/p>\n

Provided Azerbaijan hits that number, it will mark the first time the country sends more than half its gas exports to Europe.<\/span><\/p>\n

Overall, <\/span>gas production<\/span><\/a> during the first seven months of 2024 reached 29.5 bcm, a 4.6 percent increase over the previous year’s production figure for the same period. Total exports for the period rose by 5.7 percent to 14.7 bcm, just over half of which (7.8 bcm) went to Europe.<\/span><\/p>\n

While export growth is strong, total volume is still far below the level needed for Azerbaijan to fulfil a promise made to the European Union <\/span>in July 2022<\/span><\/a>to double its Europe-bound gas exports to 20 bcm per year by the end of 2027. In other words, Baku needs to increase its export volume by over 50 percent in just over three years.\u00a0<\/span><\/p>\n

Aliyev has tried to tamp down speculation about Azerbaijan’s export capacity, but he has supplied few specifics. “We are trying to do everything in order to be able to implement our commitment to supply 20 bcm only to the EU by 2027. This is our target,” he said during the UK conference.<\/span><\/p>\n

Production from Azerbaijan’s main Caspian Shah Deniz gas field is still increasing with field operator BP drilling new production wells. BP has also said that it hopes to start production from a new “deep gas field” beneath the ACG oil field later this year, or early in 2025.<\/span><\/p>\n

Crucially, neither BP nor Baku have confirmed whether the increased production will be enough to meet Baku’s commitments, not only to the EU, but also growing domestic consumption, as well as rising demand in neighboring Turkey and Georgia.<\/span><\/p>\n

Turkmenistan might hold the key to solving Baku’s export challenges. Both Azerbaijan and Turkey have shown interest in forging a transit supply arrangement with Ashgabat to potentially plug the looming supply gap to Europe. But Turkmenistan has proven difficult to pin down.<\/span><\/p>\n

In late July, Turkish energy minister Alparslan Bayraktar <\/span>visited<\/span><\/a> Ashgabat to firm up a framework agreement signed with Turkmenistan in the spring providing for up to 2 bcm of gas delivered to Turkey annually for onward transit to Europe. This arrangement would include swaps involving Iran and Azerbaijan.\u00a0<\/span><\/p>\n

Despite two days of meetings with senior Turkmen officials, including <\/span>Turkmen President<\/span><\/a> Serdar Berdimuhamedov and Energy Minister Annageldi Saparov, Bayraktar made little progress towards finalizing an arrangement. He returned to Ankara with only <\/span>an agreement<\/span><\/a> to continue working on a possible gas swap deal, and a vaguer commitment to look at developing a pipeline capable of carrying 15 bcm annually of Turkmen gas across the Caspian Sea to Turkey and on to Europe.<\/span><\/p>\n

Plans for such a pipeline have been under discussion on and off since the late 1990s; they have not progressed in large part because of the enormous cost.\u00a0<\/span><\/p>\n

Assuming Azerbaijan can boost gas production sufficiently to meet its export commitments, Baku will still have to increase the capacity of the pipelines carrying gas to Europe. Currently the three pipelines that comprise the Southern Gas Corridor can deliver a little over 10 bcm per year. The only planned expansion currently in the works would take that total to 11.2 bcm annually.<\/span><\/p>\n

To date, there has been no commitments to boost the capacity of either the South Caucasus Gas Pipeline (SCP) running from Azerbaijan through Georgia to Turkey, in which Baku is a major partner, or the TANAP pipeline that carries Azeri gas across Turkey to Greece, in which Baku holds a majority stake.<\/span><\/p>\n

A chicken-or-egg type of scenario is currently enveloping the issue of pipeline construction: Azerbaijani officials say that before huge investments are made to construct pipelines, they need commitments from European gas buyers to purchase Azerbaijani gas. But European buyers are reluctant to make such commitments before Baku proves that it has sufficient gas supplies to sell.<\/span><\/p>\n

Some incremental agreements have been reached. On August 1, Azerbaijan’s state oil company Socar began <\/span>supplying gas to Slovenia’s<\/span><\/a> biggest gas importer Geoplin. That deal brings to six the number of countries in southeastern Europe importing Azerbaijani gas. Bulgaria, Greece, Hungary, Romania and Serbia are the other regional states on the receiving end.<\/span><\/p>\n

Major EU markets for gas, including Germany, have yet to demonstrate a willingness to import Azerbaijani gas. With insufficient commitments to make the expansion of the southern gas corridor pay for itself, Azerbaijan and Turkey are pursuing workarounds.<\/span><\/p>\n

Greek gas grid operator DESFA announced back in April that it was working to expand the capacity of its cross-border link with Turkey to 5.5.bcm per year. And in July, Turkish Energy Minister Bayraktar announced plans to expand the capacity the country’s cross-border link with Bulgaria <\/span>to 7 Bcm\/yr or even 10 Bcm\/yr<\/span><\/a>.<\/span><\/p>\n

Such moves, coupled with existing unused capacity in Turkey’s own gas grid, along with planned pipeline expansions within the Balkan states, could go a long way to meeting the pipeline capacity requirements to meet Azerbaijan’s 2027 EU export target.<\/span><\/p>\n

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