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Azerbaijan has long proven itself as a reliable exporter of natural gas. The country has supplied natural gas to neighboring Georgia and Turkey for over 10 years. During the next decade, Azerbaijan will become an important actor of the European gas market, making a significant contribution to the strategy of diversification of gas supplies thanks to projects Shahdeniz-2 and the Southern Gas Corridor.

But it was necessary to solve some domestic problems first before accessing the international markets. In fact, many problems have accumulated so far, especially in rural areas. The natural gas is the only solution for a great deal of vital issues in local cities and regions, including the heating of homes. In the absence of gas, the people have to use wood or electricity to heat homes in the winter.

That is why one of the main issues in several programs for socio-economic development of Azerbaijani regions was the national gas supply. To speed up the works, Azerigaz JSC was transferred to SOCAR in 2009.

“There have been major changes in the gas industry of Azerbaijan over the past 5-6 years. The gasification of domestic households has reached 92%, although this process is not as profitable as a regular business project. This is a socially oriented project implemented under the instructions of President Ilham Aliyev. We have managed to increase the number of active subscribers from 780 thousand in 2010 to about 1.98 million presently. We expect this figure reach 2 million by the end of this year.

“We have also managed to significantly reduce the loss of gas in the distribution network by 16%. We expect to improve this figure to 3.6% by the end of 2016. The scale of loss is expressed more precisely in absolute figures: we have reduced the loss of 2 billion cubic meters to 500 million and continue implementing projects that reduce losses. At locations like Hajigabul, where we have completely renovated the infrastructure, the losses do not exceed 1%. In the villages around Baku, where the highest rate of loss was registered in Khazar district, we have managed to reduce the losses from initial 76% to 20% maximum after SOCAR has incorporated the local infrastructure. There were also problems with payments and illegal tapping, but we have changed the situation. In general, the level of due payments from customers has improved, and I can confidently say that the population has no debts to Azerigaz. This category of subscribers are paying 100%”, said SOCAR President Rovnag Abdullayev.

Mr. Abdullayev has added that the leadership of the country has set a task for SOCAR to maximize gas supply to the population by 2018, that is, before the start of Azerbaijani gas supplies to Europe.

According to SOCAR President, the investments made so far to improve the infrastructure of gas supply in Azerbaijan exceeded 1.2 billion Manats.

In 2015, SOCAR spent over 350 million Manats to the construction and overhaul of gas distribution network. This has made possible the construction of more than 12,000 kilometers of main and intranet gas pipelines, several measuring and gas distribution stations, as well as the gasification of 430 settlements and an additional 100 thousand subscribers.

In 2016, the company plans to ensure gas supply to 257 more settlements.

In general, the number of local settlements supplied with natural gas has exceeded a thousand since 2010.

Along with Azerbaijan, SOCAR implements its largest gasification project in Georgia. The project ensures the construction and rehabilitation of distribution networks in the villages and cities of the country to supply the population with natural gas. The major part of works will be completed in 2017. This will enable 75% of the Georgian population to use natural gas.

SOCAR Georgia Gas Ltd. was established in 2007 to work both in the wholesale and retail market of natural gas. The company provides supply and distribution of natural gas to customers and suppliers.

In 2008-2016, SOCAR Georgia Gas gasified 600 settlements, constructed 5,360 km of gas lines that allowed to supply gas to 209,136 subscribers. Today SOCAR Georgia Gas serves 517,843 subscribers throughout Georgia.

By the end of 2016, the company plans to build another 1,600 km of new gas lines in Georgia and to supply gas to additional 40,000 potential subscribers.

In general, SOCAR Georgia Gas intends to construct more than 7,000 km of gas distribution networks during 2009-2017 as part of its investment obligations, which will allow to connect more than 250 thousand potential subscribers to the network. In total, it is expected to invest more than $250 million into the gasification of Georgia in 2017.

A number of European countries can make use of SOCAR’s rich experience in the field of gasification. It is primarily true for Albania and Montenegro, which do not have gas transmission and distribution systems. The Trans Adriatic Pipeline (TAP) will pass through Albania and is expected to deliver the Azerbaijani gas to Italy. Therefore, SOCAR’s interest in developing gas distribution system in the country is quite natural. This will allow the company to get more profit in the retail gas market.

As for the other Balkan countries, including Montenegro and Bosnia and Herzegovina, the Ionian-Adriatic Pipeline (IAP) to be connected to the TAP has the potential to contribute to the gasification of these countries through SOCAR.

In August 2016, Vladimir Kavaric, Minister of Economy of Montenegro, stated that IAP was the only means of gasification of Montenegro and his the government was ready to do everything to accelerate and successfully implement the project.

In late August, SOCAR joined the IAP project by signing a memorandum of cooperation with the above-mentioned Balkan countries. Thanks to joint efforts of countries, the Balkan region will get access to the Azerbaijani gas, which will be delivered to every local household.

               The number of subscribers supplied with natural gas in Azerbaijan, in thousands