Europe considers doubling natural gas purchases from Azerbaijan-EU official

Europe is considering doubling natural gas purchases from Azerbaijan to 20 billion cubic metres (bcm) per year, on expectations of new potential gas fields in the ex-Soviet country in the Caspian Sea, a senior EU official said.

Azerbaijan plans to start gas deliveries to Europe this autumn from its giant Shah Deniz field through the Southern Gas Corridor (SGC), a major step in EU efforts to secure gas supplies and reduce its dependence on existing sources such as Russia and Norway.

“We are considering the possibility of expanding the Southern Gas Corridor, taking into account the potential of Azerbaijan’s new fields … up to 20 billion cubic meters,” Klaus-Dieter Borchardt, a director of the European Commission’s energy division, told a news conference in Baku.

“This has already been agreed.”

The Shah Deniz I field, which has been pumping gas since 2006, has a production capacity of 8 bcm, and output from Shah Deniz II is expected to reach 16 bcm of natural gas per year, with 10 bcm earmarked for Europe and 6 bcm for Turkey.

The first commercial gas deliveries to Turkey from Shah Deniz II began in June 2018. Shah Deniz is developed by an international consortium led by BP.

SGC’s three pipelines – the South Caucasus Pipeline extension through Georgia, the Trans-Anatolian Natural Gas Pipeline (TANAP) through Turkey and the Trans-Adriatic Pipeline (TAP) to Greece, Albania and Italy – will provide the first direct route for Azeri gas to markets in Europe.

Azeri state energy company SOCAR is considering two possible options regarding expansion of TAP, a source at the company told Reuters.

“The final decision has not been made yet… It will be clear in 2021,” the source said.

Azerbaijan has an estimated one trillion cubic metres of reserves at its Shah Deniz gas field, the biggest in the country, and is looking for more reserves in other areas, including the Absheron gas field, where Azeri state energy company SOCAR works with France’s Total.

SOCAR vice president Yashar Latifov told Reuters last month that the start of production at Absheron was expected in mid-2021 and its reserves could exceed an estimated 300 bcm, allowing output at a plateau level of 5 bcm per year.

Azerbaijan sees further gas prospects at the Umid and Babek fields, where SOCAR works independently.
Source: Reuters (Reporting by Nailia Bagirova; additional reporting and writing by Margarita Antidze; editing by Nick Macfie)