(MENAFN- AzerNews)
Nazrin Abdul
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President Ilham Aliyev's adept management of Azerbaijan's oil
strategy has propelled the country onto a prominent trajectory,
establishing it as a significant global gas exporter. At the heart
of this achievement is the Southern Gas Corridor, a landmark
project spearheaded by Azerbaijan under President Aliyev's
guidance, demonstrating the nation's capacity to undertake and
deliver on major international energy initiatives.
Strategically located as a critical LINK between Europe and
Asia, Azerbaijan is endowed with extensive natural, geographical,
and cultural resources. The country's rich history of natural
resource extraction is underscored by its substantial oil and gas
reserves, with its territory being among the oldest oil-producing
regions globally.
Through the Southern Gas Corridor, Azerbaijan supplies gas to
Europe, with the Trans-Adriatic Pipeline (TAP) representing the
European segment of this corridor. TAP's transmission capacity has
now reached 12 billion cubic meters per year. From January to June
of this year, Azerbaijan exported 6.4 billion cubic meters of
natural gas to Europe, marking a 12.3% increase from the same
period in 2023.
Overall, Azerbaijan's gas exports totaled 12.7 billion cubic
meters in the first half of this year, reflecting a 6% increase
compared to the previous year. Specifically, 5 billion cubic meters
of gas were sold to Turkiye, and 1.3 billion cubic meters to
Georgia, with both figures remaining steady compared to the
previous year. During this period, approximately 2.8 billion cubic
meters were transported to Turkiye via the Trans-Anatolian Gas
Pipeline (TANAP), maintaining the same level as last year.
The completion of TAP in October 2020, stretching 878
kilometers-550 km through northern Greece, 215 km through Albania,
105 km across the Adriatic Sea, and 8 km into Italy-has been a
major milestone. Azerbaijani gas began reaching consumers in Italy,
Greece, and Bulgaria on December 31, 2020.
Natural gas from Azerbaijan's Shah Deniz field is transported to
Turkiye through the South Caucasus Pipeline (Baku-Tbilisi-Erzurum)
and TANAP, with commercial gas transportation via TANAP commencing
on June 30, 2018. The first gas entered the Turkish market through
the Baku-Tbilisi-Erzurum pipeline in 2007.
Looking ahead, Azerbaijan plans to significantly boost its gas
exports to Europe. As a pivotal player in the European energy
market, the country aims to enhance its role in Europe's energy
security by expanding natural gas exports while also focusing on
renewable energy sources like solar and wind. The“Memorandum of
Understanding on Strategic Partnership in the Field of Energy”
signed last year between Azerbaijan and the European Union
underscores a robust cooperative framework. This agreement not only
strengthens energy ties between Azerbaijan and the EU but also
addresses the EU's energy demands and security needs, laying the
groundwork for long-term economic relations between Azerbaijan and
European nations.
The "Shah Deniz" field in Azerbaijan's Caspian Sea sector holds
confirmed reserves estimated at approximately 1.2 trillion cubic
meters. This substantial reserve base, alongside the discoveries of
the "Umid" and "Babek" fields, significantly boosts Azerbaijan's
gas potential. Currently, the field produces an average of 3.1
million cubic meters of gas and 470 tons of condensate daily from
four operational wells. Since production began in 2012,
approximately 6.7 billion cubic meters of gas and 1 million tons of
condensate have been extracted. Plans are underway to drill and
operationalize two additional wells from the "Umid-1" platform.
These new gas fields enable Azerbaijan to expand its gas exports
while integrating renewable energy sources into its production.
As the principal partner of the European Union in the South
Caucasus, Azerbaijan plays a critical role in transporting Caspian
Sea gas to the EU market via the Southern Gas Corridor. This
corridor, comprising the South Caucasus Pipeline (SCP), the
Trans-Anatolian Pipeline (TANAP), and the Trans-Adriatic Pipeline
(TAP), is the largest infrastructure project designed to meet the
EU's gas demand and bolster its energy security. The SCP, which
runs through Azerbaijan and Georgia to the Turkish border, has been
expanded. TANAP, stretching 1,850 kilometers across Turkiye,
connects the Caspian region to European markets. TAP, extending
approximately 878 kilometers, connects to TANAP with an initial
capacity of 10 billion cubic meters and a potential capacity of 20
billion cubic meters. TAP represents the final segment of the
Southern Gas Corridor, delivering Azerbaijani gas to European
consumers.
Azerbaijan aims to increase its gas exports to 20 billion cubic
meters by 2027 through the 3,500-kilometer-long Southern Gas
Corridor pipeline. This expansion will enhance Europe's energy
diversification and reduce its reliance on other gas suppliers,
mitigating geopolitical risks. With confirmed gas reserves of 2.6
trillion cubic meters and predicted reserves of about 3 trillion
cubic meters, Azerbaijan is positioned as a reliable and crucial
energy supplier for Europe.
President Ilham Aliyev has highlighted the pressing need for
additional gas in Europe, noting that despite Azerbaijan's efforts
to expand its gas infrastructure, European financial institutions
have not provided the necessary funding. Azerbaijan recently signed
an agreement with a Slovenian company, making it the ninth partner
to purchase Azerbaijani gas. However, President Aliyev pointed out
that while Europe demands an expansion of the Southern Gas Corridor
from 16 billion to 32 billion cubic meters-necessitating
significant investments in TANAP and TAP-European financiers have
yet to support these projects. He expressed frustration that
despite Azerbaijan's substantial investments, the benefits are not
fully realized, and the revenue generated is largely directed
toward repaying these investments. Aliyev questioned the rationale
behind investing billions in gas that Europe might not need in the
future, emphasizing the critical role of fossil fuels in the
present energy landscape.
The recent increase in natural gas prices on the European
market, exacerbated by the ongoing conflict between Russia and
Ukraine, underscores the urgency for additional energy sources.
With the current gas export agreement between Russia and the EU set
to expire next year, Europe's need for alternative energy supplies
becomes even more pressing.
Azerbaijan, with its vast oil and gas reserves, has been a focal
point in the global energy landscape. Two major fields, "Shah
Deniz" and "Umid," have recently been discovered, further enhancing
Azerbaijan's gas potential. The country's oil and gas fields are
predominantly located in the Absheron Peninsula, the Caspian Sea
shelf zone, and the Baku and Absheron archipelagos, with additional
deposits found in southeastern Shirvan, Central Aran, Gobustan,
Jeyranchol, Acinohur, and Siyazan regions. Azerbaijan's oil and gas
resources, including shale and peat, are crucial, with hydrocarbons
being the primary product. Over the past few decades, numerous
gas-condensate deposits have been identified and developed.
Currently, Azerbaijan has eight active oil and gas regions and
two promising areas, with the largest deposits located in Absheron,
Baku archipelagos, and Ashaghi Kuryan regions. Expanding gas
exports will not only boost Azerbaijan's economy but also
positively impact regional development. The Southern Gas Corridor
has already created jobs and spurred economic growth in Azerbaijan,
Turkiye, and transit countries. Increased gas exports will further
contribute to Azerbaijan's socio-economic development, support
infrastructure projects, and improve public services. Thus,
enhancing gas exports through the Southern Gas Corridor is crucial
for regional energy security and economic stability.
Currently, Europe's underground gas reserves are at 84.12
percent capacity, and Russia supplies 41.9 million cubic meters of
gas per day. With the agreement between Russia and the EU on gas
exports set to expire in 2025, Europe will need alternative sources
to secure its energy needs. One potential alternative is
Azerbaijan, which is a key player in the Southern Gas Corridor,
including the Trans-Adriatic Pipeline (TAP). The gas fields in
Azerbaijan's Caspian Sea, such as Shah Deniz, Umid, and Absheron,
could play a crucial role in diversifying Europe's energy supply
away from Russian gas. President Ilham Aliyev has mentioned that
Azerbaijan's gas production is expected to increase to 20 billion
cubic meters by 2027. However, he has also pointed out that despite
Europe's desire to expand the Southern Gas Corridor, Europe has not
provided financing for this expansion. Azerbaijan has yet to fully
benefit from its investments in this infrastructure, and its oil
and gas revenue is primarily focused on paying off these
investments. This highlights a significant challenge: while
Azerbaijan can potentially enhance Europe's energy security by
providing an alternative source of gas, the financial and strategic
challenges related to infrastructure investment and the lack of
European support might constrain its ability to fully assume this
role.
In summary, Azerbaijan has the potential to bolster Europe's
energy security by offering a reliable alternative to Russian gas.
However, the extent of its impact will depend on overcoming
investment challenges, securing European financing, and effectively
managing the economic pressures of developing and expanding the
Southern Gas Corridor.
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