DEMAND GROWS, SO WILL SUPPLY

Europe is confident that it will avoid gas shortages during the winter season in 2022-2023 thanks to the warm weather on the continent in recent weeks. According to Trafigura, one of the largest oil suppliers in Singapore, European gas reserves may drop by no more than two thirds this winter, provided that the weather stays mild and Russian transports through Ukraine continue. This means the region will be able to survive the upcoming heating season and have enough fuel to avoid a crisis next year as well.

EU energy commissioner Kadri Simson said the EU had replaced all the gas volumes lost in Russia thanks to LNG as well as pipeline gas from other suppliers.

Nevertheless, almost all European countries continue to actively search for alternative sources of gas imports, primarily from Azerbaijan.

Increasing supplies

Since the start of the Russian-Ukrainian war, Azerbaijan has received more than 10 requests from European countries to either increase or start supplying gas to Europe. "At the moment we do not have enough gas to satisfy all the requests. Therefore, we need to start, I think immediately, the commercial negotiations, primarily with the countries which are recipients of Azerbaijani gas because both the lines are there and all the legal framework exists," President Ilham Aliyev said at the international conference Along the Middle Corridor: Geopolitics, Security and Economy held on November 25 at the Azerbaijan Diplomatic Academy.

Meanwhile, according to Energy Minister Parviz Shahbazov, Azerbaijan increased its gas exports by 7.4% in January-October 2022. Of the total volume of Azerbaijani export gas, 9.3 billion cubic meters (bcm) was delivered to Europe, 6.9bcm to Turkey and 2bcm to Georgia.

In total, more than 18bcm of natural gas has been exported from Azerbaijan to Europe since the operation of the Trans Adriatic Pipeline (TAP), the TAP consortium reported on Twitter. "Another milestone! Since the start of commercial operations, TAP has safely transported over 18 bcm of natural gas to Greece, Bulgaria and Italy. TAP’s capacity can be doubled in stages to further contribute to Europe's energy security," the TAP twit said.

Azerbaijan is doing its best to increase gas supplies via TAP. But... " There have been certain difficulties with the construction of TAP.  We also know that these obstacles were artificial. We dealt with these obstacles very seriously and Azerbaijan by now has improved the energy security in Italy. There is a demand to increase the volume of natural gas from Azerbaijan to Italy. But for that we need to expand the capacity of TAP. Since Azerbaijan has only 20% share in TAP, we cannot be the only contributor to this. I think the sooner we make a decision on this issue, the better because TAP works at full capacity," President Aliyev said.

We need a new agreement

Azerbaijan has always been positive on expanding the geography of supplies and supported European initiatives to build interconnectors. Reliable infrastructure is the most important incentive to intensify efforts to increase the gas production.

"One of the interconnectors, Greece-Bulgaria (IGB), was launched in Sofia last month. I was also present at the ceremony. The second one between Bulgaria and Serbia will be ready next year," President Aliyev said.

By the way, considering the first event, President Aliyev calls for the activation of the Trans-Balkan pipeline running through Ukraine, Moldova, Romania, Bulgaria and Turkey. "We are ready. The capacity of this pipeline (IGB) is 3bcm. Therefore, we are ready, perhaps, to supply the required volumes within a month. But for this we must have a transit agreement with Turkey," President Aliyev said.

He noted that negotiations with Ankara are ongoing. "They are taking longer than we expected. We hope that we will reach an agreement, because if we fail for some reason, all our plans related to the supply of additional gas volumes to Turkey and Europe will be at risk. All this will require additional investments. We must have transit arrangements with our Turkish colleagues. Otherwise it will be impossible to meet the growing needs of European as well as Turkish consumers," President Aliyev said.

Serbian hopes

Serbia is expecting a lot from the second interconnector. Serbian Minister of Mines and Energy, Dubravka Djedovic, openly mentioned this at her meeting with her Azerbaijani counterpart Parviz Shahbazov recently in Belgrade.

"When the Serbia-Bulgaria Interconnector is completed, we will have a chance to connect to the Southern Gas Corridor through IGB. This will give us a completely new supply route and further diversify our energy sources. The connection to the Southern Gas Corridor will enable supplying Serbia with natural gas from Azerbaijan, i.e. from the Shah Deniz gas field in the Caspian Sea", Djedovic said.

This theme, i.e. Azerbaijan's ability to support Serbia's energy security, also dominated during Ilham Aliyev's talks with his Serbian counterpart Aleksandar Vucic during his recent visit to Belgrade. "Azerbaijan's rich gas resources contribute to the energy security of many countries, and our role will gradually grow. In this and in all other areas, we intend to deepen cooperation with friendly countries first and foremost," Ilham Aliyev said in his statement for the press.

Vucic added that Azerbaijan was a powerful country, which in seven, eight or ten years will export more than 35bcm of gas. "Today, the export of gas is about 22bcm. More than half of this volume is transported to European countries. That is why we are working on establishing an interconnector between Serbia and Bulgaria in order to be able to deliver considerable amounts of gas exported by our friends in Baku," the Serbian leader said.

Practically all Balkan countries are interested in the Azerbaijani gas. Moreover, Azerbaijan is actively discussing with the Albanian government the issue of investing in that country's gas distribution network, as there is no such network there. Another perspective project is the construction of the Ionian-Adriatic Pipeline (IAP), which would cover three Balkan countries - Albania, Montenegro and Bosnia and Herzegovina.

Production plans

There is high demand for the Azerbaijani gas. But will there be enough gas to satisfy them?

According to President Ilham Aliyev, it is planned to start gas production from the Absheron field in the Caspian Sea as early as in 2023. "We continue to work with foreign oil companies and plan to increase gas production from existing and new fields that will be launched next year, in particular from the Absheron gas condensate field," Aliyev said.

He noted that the annual production rate at Absheron will initially be at 1.5bcm. The field will be developed in stages. Absheron is estimated at 350-360bcm of gas and 100 million tonnes of condensate.

As for another important project, gas production from the deep level of the Guneshli field, President Aliyev said that projects such as deep gas from ACG are needed now more than ever. "I know that negotiations between BP and SOCAR on these projects are progressing very well. Earlier there were certain delays, as the SOCAR management have not agreed their actions with the Azerbaijani authorities. But now everything is clear: the market needs Azerbaijani gas and it is time to use this huge potential," President Aliyev said.

Thus, Azerbaijan will be ready to take up the challenge and respond with dignity to the growing demand in the European gas market. And if all the involved parties concretely implement the tasks to create the necessary infrastructure for supply, these projects will be an important step towards ensuring the energy security of Europe.