Azerbaijan has reiterated its aim to grow natural gas pipeline exports to Europe to 20 billion cubic metres in 2027, although it is reliant on ongoing efforts to improve pipeline infrastructure in Southern Europe.
Speaking at an inauguration ceremony for a gas interconnector between Serbia and Bulgaria in the Serbian town of Nis, Azeribajan’s President Ilham Aliyev said that Azeri gas sales to Europe will top 12 Bcm in 2023, rising modestly by just over 5% this year against 2022.
Last year, as Russian gas giant Gazprom halted gas exports to Europe, Azeri gas deliveries to the continent shot up to 11.4 Bcm against 8 Bcm in 2021, the country’s authorities said earlier.
In anticipation of commissioning of the interconnector, Azeri state-run oil and gas producer Socar last month signed a deal with Serbia to deliver 400 million cubic metres of gas to the country next year.
Aliyev also said he anticipates Azeri gas deliveries to Bulgaria will reach 1 Bcm this year against 500 MMcmd in 2022, as Sofia seeks to replace Russian pipeline gas that previously arrived to the country via Ukraine and Romania.
Also this year, Azerbaijan signed gas supply deals with Hungary and Romania to add to its existing contracts to deliver gas to Italy and Greece.
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A partner at the Baku-based Centre for Oil Studies, Ilham Shaban, said that Azerbaijan has sufficient indigenous “gas reserves” to reach the announced export target in the long-term run despite earlier claims from Moscow that the country does not possess a sufficient resource base.
However, he believes “it will be problematic” for Azerbaijan to source the necessary export gas from domestic developments by the deadline of 2027.
Shaban said that there is still no “commercial gas sales agreement with buyers” to underpin the development of the second phase of the Absheron offshore project that Baku views as a largest contributor to its European gas export expansion.
The TotalEnergies-led project started gas production at the first phase in July.
“In the best-case scenario, if the sales agreement is inked in the first quarter of 2024, Absheron’s second phase will produce first gas not earlier than in 2028,” Shaban said.
Two other possible contributors to gas resources are the BP-led Azeri-Chiraq-Gunashli offshore oil development where the operator plans to drill two wells into deep gas reservoirs, with each probe expected to produce 1 Bcm of gas per annum after 2025.
In November, Socar also began first gas production at the Umid offshore field in the Caspian Sea, with annual production at the asset anticipated to hit 3 Bcm by 2026, according to Shaban.
The Serbia–Bulgaria connector has a length of 170 kilometres of which 62 kilometres are in Bulgaria and the rest in Serbia.
Its transmission capacity is 1.8 Bcm per annum, allowing gas to be shipped from Bulgaria to Serbia and vice versa.
Brussels said the European Commission co-funded the Bulgarian section of the pipeline with €33.6 million ($36 million) under its gas infrastructure development initiatives.
The EC has also funded the Serbian section of the pipeline with an EU grant of €49.6 million even though Serbia — one of Russia’s closest allies in Europe — is not yet an EU member, although it has pre-accession status.
“With this interconnector, we are securing alternative gas supplies, apart from the Russian gas,” Serbian Mining & Energy Minister Dubravka Djedovic Handanovic said at the inauguration ceremony in Nis, according to Reuters.
“Today we are changing the energy map of Europe,” said Bulgaria’s President Rumen Radev who also arrived to attend the ceremony this past weekend.
“The interconnector is significant for the entire region. The war in Ukraine made us think about good neighbourly relations and support”, Radev added.
* Article updated with comment from analysts on Azerbaijani gas resources.
