Page 10 - bne IntelliNews monthly magazine May 2024

10 I Companies & Markets bne May 2024
Azerbaijan's Oil And Gas Export Routes
to information published by the international rating agency S&P Global Ratings, plans are currently being developed
to establish the necessary infrastructure for gas distribution in Albania.
This initiative will allow Albania to diversify its energy sources by leveraging existing infrastructure such as the Trans-Adriatic Pipeline (TAP), reducing the country's dependence on hydroelectric power, and let Albania transit gas on to the wider European markets, including Italy, according to S&P.
Albania is expected to receive approximately 200mn cubic metres of Azerbaijani gas annually. This coincides with the planned first phase of the expansion of the Trans-Adriatic Pipeline, which will increase its capacity by an additional 1.2 bcm. Of this volume, 1 bcm is intended for Italy.
TAP’s capacity will also be expanded to receive an additional 1.2 bcm of Azerbaijani gas by the end of 2025. From 2026, Italy will receive 1 bcm from this volume, while Albania will receive an additional 200 mcm.
Whose gas is it?
But Azerbaijan growing gas exports is not without controversy. While Azerbaijan exports to the EU have risen, so have imports of gas to the country from Turkmenistan and Russia, effectively enabling the re-export of Russian gas to Europe by the backdoor, say critics. However, these claims have not been corroborated by official sources
and have been disputed by representatives from both Azerbaijan and the EU.
“Italy, Greece and Bulgaria are the main customers in Europe and increased their imports to record volumes in 2023, reaching approximately 12.9 bcm”
A representative from the European Commission for Climate Action and Energy, Tim McPhie, emphasised that the EU imports exclusively Caspian resources from Azerbaijan.
The volumes of imports from Russia to Azerbaijan are significantly less than the volumes Azerbaijan exports to Europe, McPhie said.
SOCAR vice president Elshad Nassirov also addressed the question of the re-exporting of Russian gas, pointing out the technical impossibility of any gas other than that from the Shah Deniz field entering the South Caucasus Pipeline.
Azerbaijan does import gas from Russia, which is used to
Source: S&P Global Platts
Azerbaijan has been increasing its exports of gas to Europe to make up some of the Russian shortfall. It is also planning to increase the amount of Kazakh oil transiting its territory to reach the international markets.
The president said Azerbaijan is advancing towards an ambitious goal of doubling its gas exports to Europe by 2027. That means Azerbaijan will not only have to increase natural gas production volumes but also significantly expand the capacity of three key pipelines of the Southern Gas Corridor (SGC). This corridor is a vital artery for delivering Azerbaijani gas from the shores of the Caspian Sea directly to European markets.
Production and export rising
By the start of 2024 Azerbaijan was the fourth largest supplier of pipeline gas to the EU behind Algeria, Norway, the United Kingdom and Russia.
Italy, Greece and Bulgaria are the main customers in Europe and increased their imports to record volumes in 2023, reaching approximately 12.9 bcm, based on Eurostat data.
The EU used to import some 150 bcm from Russia of which about 25 bcm is still delivered via pipelines via Turkey and Ukraine, so there is still plenty of unsated demand. Gas production expanded by 3.8% in 2023, reaching 48.5 bcm, and exports grew by 6.9% to 23.8 bcm. Minister of Energy
of Azerbaijan Parviz Shahbazov said recently the republic’s plan is to increase production to 49 bcm of gas in 2024, with 24 bcm earmarked for export. And that plan is on track after Azerbaijan exported 4.1 bcm of gas, of which 2.1 bcm was sent to Europe in the first two months of this year.
Azerbaijan also wants to expand the list of European countries purchasing Azerbaijani gas, which currently includes Italy, Greece, Bulgaria, Romania, Hungary and Serbia.
For example, in 2026, Albania intends to start using Azerbaijani natural gas to meet its energy needs. According
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