ONE MORE LINK

December 10 saw yet another important event in the history of stable exports of Azerbaijani gas to Europe: the opening ceremony of the Serbia-Bulgaria gas interconnector took place in the Serbian city of Nis.  The event was attended by the presidents of the three staeholder countries - Ilham Aliyev (Azerbaijan), Aleksandar Vucic (Serbia) and Rumen Radev (Bulgaria).

"Last year, the European Union and Azerbaijan signed a Memorandum of Understanding on strategic partnership in the energy sector. It is being implemented. Thus, Azerbaijan should double the volume of gas supplied to Europe by 2027. The figures already show that we are confidently moving towards this goal," President Aliyev said in his keynote speech at the ceremony.

Azerbaijan is reported to be among the top five largest suppliers of pipeline gas to Europe in April-June, along with Norway (47.7%), North Africa (19.6%), the UK (13.8%) and Russia (12.4%).

A new link in just one year

In the last couple of years, due to the current geopolitical situation, the energy map of Europe has been changing quite rapidly. Under the new conditions, Azerbaijan is rapidly taking up the position of one of the key gas suppliers to Europe. Thus, in 2021, exports to Europe totalled just over 8 billion cubic metres (bcm). In 2023, they will reach almost 12bcm - that's 50% of total gas exports. "The demand for Azerbaijani gas is growing. We have responded favourably to the European Commission's request to increase gas supplies to Europe due to sanctions against Russia. This will continue to be an important part of our business," President Ilham Aliyev said the other day in his interview with Euronews.

Currently, the main direction of exports is the Balkans. Azerbaijan, Bulgaria, Hungary, Slovakia and Romania signed a Ring of Solidarity agreement in April to utilise domestic European gas interconnectors to increase Caspian gas flows through the Southern Gas Corridor.

New promising directions became even more important after the Greece-Bulgaria interconnector (IGB) was commissioned in October last year. Bulgaria began to receive Azerbaijani gas in the contracted volumes (1bcm annually). This gas pipeline, with an initial annual capacity of 3bcm and a design capacity of 5bcm, will supply gas to Serbia, Northern Macedonia, Romania and, in the future, Moldova and Ukraine. This is why operators in Bulgaria, Romania, Hungary and Slovakia have offered to transport increased volumes of Azerbaijani gas through their networks to Central Europe.

Azerbaijani gas has already been supplied to the Romanian market via IGB since 2023. After the launch of the interconnector with Serbia, it started to flow to this country as well.

Serbian Minister of Mines and Energy Dubravka Djedovic-Handanovic spoke about the project at the commissioning ceremony.

She said that the project was planned many years ago, its realisation took a long time, and it was possible to complete the construction in just one year. "In a short time we have agreed with our friends from Azerbaijan to transport the gas. Despite the absence of common borders with Azerbaijan, it is undoubtedly our friend who holds a special place in our hearts," she added.

In her interview with journalists, Djedovic-Handanovic said that the gas pipeline was planned to be operated at full capacity. In the future, if necessary, its capacity could be expanded to 3.2bcm. This will make it possible for Serbia to cover its demand for natural gas almost 100 per cent. "Currently, the main source of gas for this pipeline is Azerbaijan. We signed a contract for 400 million cubic metres (mcm) of gas until 2026. Starting from 2027, the volume of supplies can almost triple," she said.

Exemplary partnership

Bulgarian President Rumen Radev believes that Serbia, Azerbaijan and Bulgaria are exemplary countries "due to their constant contribution for a safer and better future of our states and attention to this work". He recalled that the Bulgaria-Serbia Interconnector was launched during President Vucic's visit to Sofia in early February, and the work was completed in less than a year. "The Bulgaria-Serbia Interconnector is not only an infrastructure project. It is a symbol of the growing technological capabilities of our countries, as well as successful and mutually beneficial co-operation between Serbia and Bulgaria, between Bulgaria, Serbia and Azerbaijan," Radev said.

He noted that the war in Ukraine forced European countries to seek not only new resources, new ways, new effective solutions in the logistics and energy spheres, but also to create a more intensive and stronger international map.

The interconnector is one of the projects that can change the energy map of Europe. It has been assessed by the European Commission as being of mutual interest.

"I am grateful to the European Commission for its financial support, as well as for promoting this project of importance for the whole of Europe," Radev said.

The EU allocated a grant of almost 50 million euros for this project. The funding from the European Investment Bank was a soft loan of 25 million euros. Another 20 million euros were provided for the construction of the interconnector in Bulgaria. Speaking about its significance, Emmanuel Jofre, Head of the EU Permanent Delegation to Serbia, said: "We are connecting Bulgaria to Serbia, Serbia to the European Union. From this point of view, this infrastructure is of strategic importance for Serbia and the European Union. We also note the possibility of increasing the share of gas in the total energy mix, which is a step towards decarbonising our economy in line with the European Union's Green Deal and allows us to move from more polluting energy sources such as coal to less polluting ones such as natural gas."

Ongoing expansion plans

As for Azerbaijan, the Serbia-Bulgaria interconnector is another factor to expand the geography of gas exports. Currently, Azerbaijan exports natural gas to eight countries - Serbia has become the ninth in this list. "Seven of these nine countries are European countries, and naturally, today's ceremony, the launch of the interconnector, will also make an important contribution to the energy security of Europe," President Ilham Aliyev noted.

In the future, it is planned to expand the geography of gas supplies and enter the markets of other countries through new interconnectors in the European space.

The Ionian-Adriatic Pipeline (IAP) is among the promising projects to expand Azerbaijan's energy ties with the Balkan countries. Through the IAP, Azerbaijani gas from Albania will go from Albania to Croatia via Montenegro and Bosnia, and then to Central Europe. It will make it possible to supply three more Balkan countries with gas and to consider Azerbaijan's expansion into the Balkan gas market as completed.

The Southern Gas Corridor, including all its pipeline components, TANAP and TAP, is planned to be expanded to deliver additional gas volumes from Azerbaijan to Europe.

With all these factors in mind, Ilham Aliyev said investments in fossil fuel projects will continue, as Azerbaijan has a huge resource potential and there is a great demand for Azerbaijani gas in Europe.

The Shahdeniz consortium is working to increase production to increase annual exports to the EU from 10b to 20b by 2027. As gas production from the Shahdeniz field grows, so does the geography of gas supplies.

"The total demand of more than 10 European countries for Azerbaijani gas reaches 30bcm annually. Therefore, gas projects implemented by Azerbaijan are an important source of supplying additional volumes," Azerbaijani Energy Minister Parviz Shahbazov said.

In short, the energy map of Europe with Azerbaijan's participation continues to transform very rapidly. There have hardly been any analogues of such large projects realised in such a short period of time.

NEWS

Production from Absheron to reach 1.5 billion cubic metres (bcm) in 2024

Gas production from the Absheron field in the Azerbaijani sector of the Caspian Sea is projected to reach 1 billion 474 million cubic metres in 2024.

According to the Accounts Chamber of Azerbaijan, the budget of the State Oil Fund (SOFAZ) notes that by the end of 2023 the gas production at the Absheron field will reach 707.55 million cubic metres (mcm). Thus, in 2024, production at the field will increase by 2.1 times compared to 2023.

Condensate production from Absheron is expected at 4.05m barrels in 2024, compared to 2m barrels in 2023.

As reported, French TotalEnergies and SOCAR on July 10, 2023 announced the start of production within the first phase of the Absheron field development. According to the Ministry of Energy of Azerbaijan, 500mcm of natural gas and 200,000 tonnes of condensate were produced at the field in July-October 2023.

Currently, 4.3mcm of gas and 1,400 tonnes of condensate are produced daily from the Absheron field within the first production phase. The gas is intended for the domestic market of Azerbaijan.