The US’s Energy Information Administration (EIA) has recently released a report that Azerbaijan has increased its natural gas production and contributed to the development of its pipeline to Europe. In addition, it was revealed that Azerbaijan intends to significantly increase exports to Europe and Turkey against the backdrop of the recent rise in gas prices. Azerbaijan had benefited due to soaring natural gas prices in Europe. (Photo quoted from Yahoo’s image)

According to the EIA, Azerbaijan's natural gas production in 2019 increased by 200 billion cf (36%) compared to 2017. The Shah Deniz natural gas field development project Phase 2 in the Caspian Sea contributed significantly to the increase in production, and production in the first half of 2021 increased from 175 billion cf in the first half of 2018 to 350 billion cf.

With the completion of the TAP pipeline at the end of 2020, the entire pipeline route "Southern Gas Corridor" to Europe was opened, and it seems that the export volume to Europe is increasing rapidly.

In 2019, 28 EU member states (at that time before the UK left) were more than 38% dependent on Russia for imports, but the EU has diversified its supply sources and depends on one country as its source. The "Southern Gas Corridor" pipeline was built to reduce the number of member states in the EU.

In response to the recent rise in natural gas prices, Azerbaijan intends to increase gas exports to Turkey and Europe to a maximum of 16 billion cubic meter by 2022.

Azerbaijan's energy minister has recently announced plans to increase natural gas exports to a maximum of 16 billion cubic   meter by 2022. Ultimately, it plans to use the "Southern Gas Corridor" pipeline with a plan of 6 billion cubic meter for Europe and 10 billion cubic meter for Turkey. Azerbaijan has agreed with Turkey to supply 3.5 billion cubic meter of additional gas from 2023.

In Europe, in order to recover economic activity from the new coronavirus disaster, the energy source is switched to natural gas, which emits less carbon dioxide (CO2) as part of the lack of output of wind power generation and decarbonization.

Due to the shortage of supply from Russia, the supply of natural gas to Europe tends to be stagnant, and the demand for natural gas is increasing and the price is rising. By dint of these complex factors, it is often said that Azerbaijan is in a position to benefit unexpectedly.

Jiro Arihara

　Global Commodity Watcher