SOCAR’S MEDITERRANEAN VENTURE

February has already brought surprises to Europe, both in terms of weather and gas prices. Recently, prices surpassed the $620 per thousand cubic metres mark for the first time since October 2023. The situation with gas reserves in European storage facilities is also far from ideal: reserves are depleting faster than usual amid an anticipated cold spell, and it is expected that temperatures in Europe will drop further, leading to even more intensive gas usage. Price increases are also being driven by the uncertainty surrounding future supplies.

A Role in Energy Security

The transit of Russian gas through Ukraine remains unresolved. Slovakia has resumed purchasing Russian gas, though it now arrives via Hungary, which receives its fuel through the "Turkish Stream." Slovak Prime Minister Robert Fico believes this was made possible through the efforts of Moscow and Ankara. At the same time, he continues to explore ways to resume the transit of Russian "blue fuel" through Ukrainian territory. In this context, the situation remains stable: on one hand, the Slovak prime minister continues to threaten retaliatory measures, including halting gas supplies from the EU to Ukraine; on the other, he speaks of exploring the possibility of securing Azerbaijani gas on a long-term basis. Fico announced this personally, posting a video address on Facebook following an informal EU summit in Brussels. Meanwhile, Ukraine's Ministry of Foreign Affairs stated that work on the possibility of transporting Azerbaijani gas through Ukrainian territory to Europe is ongoing. "This is not about transporting any other gas under the guise of Azerbaijani gas. We are specifically talking about Azerbaijani gas and Ukraine's role in its transportation. Work is underway," clarified Georgiy Tykhyi, spokesperson for Ukraine's Foreign Ministry.

At the same time, SOCAR’s leadership hosted directors from Slovenian companies Geoplin d.o.o. and Petrol d.d. in Baku, where they discussed opportunities to expand cooperation in the gas sector. All of this underscores Azerbaijan’s important role in ensuring Europe’s energy security and suggests a high likelihood of new agreements for the purchase of Azerbaijani gas with European buyers.

A Mediterranean Asset

On the final day of January, SOCAR signed an agreement with Union Energy to acquire a 10% stake in the Tamar project—one of the largest offshore gas fields in the Mediterranean. Located off the coast of Israel, Tamar is not just a gas field but a strategic asset that powers an entire region.

“This acquisition marks SOCAR’s first major investment in exploration and production projects in the Mediterranean,” the company stated, adding that they do not intend to stop there. The search for strategic assets worldwide continues. The Israeli project is operated by the American company Chevron, which holds a 25% stake.

The field was discovered in January 2009 and features six subsea wells, each with a capacity of 250 million standard cubic feet per day. The first gas was extracted in April 2013, and by the end of July that year, production had reached full capacity. According to an independent resource assessment conducted by Ireland’s National Standardisation Agency, the gas reserves here are estimated at 389 billion cubic metres.

Back in October 2023, a consortium comprising SOCAR, bp, and NewMed Energy received a licence from Israel’s Ministry of Energy and Infrastructure to explore natural gas in Israel’s exclusive economic zone in the Mediterranean. SOCAR was appointed as the project operator. However, work on this project was halted due to the escalation of the conflict between Israel and Hamas.

Thus, Tamar represents a new attempt by Azerbaijan’s state oil company to enter the Middle Eastern gas market, and this time, the chances of success appear significantly higher. Given SOCAR’s pragmatic approach to investment initiatives, especially abroad, there is little reason to doubt this. Clearly, the company has far-reaching plans in the region. Its entry into the upstream sector in the Mediterranean, particularly in Israel, marks a new phase in its development.

Until recently, SOCAR’s international activities were primarily focused on oil refining, trading petroleum products, and liquefied natural gas. Now, the company is taking a step towards production, opening up new prospects in the Middle Eastern market. SOCAR is reaching a new level, becoming an active participant in the exploration and development of hydrocarbon fields beyond Azerbaijan. This journey began in August 2024, when SOCAR acquired a 3% stake in the offshore oil and gas projects SARB and Umm Lulu in the UAE from ADNOC. The latest deal further strengthens its position in the global energy industry.

The announcement of SOCAR’s entry into the Tamar project is a landmark event. First and foremost, it confirms the strength and dynamism of the energy partnership between Baku and Tel Aviv. Azerbaijan is already a major supplier of oil to Israel. Now, energy cooperation between the two countries is expanding beyond oil trade to include the gas sector.

Another key aspect is Azerbaijan’s existing export infrastructure for transporting natural gas to Europe via the Southern Gas Corridor, which connects Azerbaijan to markets in Georgia, Türkiye, Greece, Bulgaria, Albania, Italy, and other countries. With its entry into the Tamar project, SOCAR opens up new opportunities, as Israel’s gas resources, including Tamar and Leviathan, could become part of this transportation system.

For Europe, this could mean a new source of non-Russian gas at a time when the EU is seeking to diversify supplies and reduce its dependence on Russia. Existing routes from the Eastern Mediterranean to Europe remain limited, and projects to build subsea pipelines face technical and geopolitical challenges.

In this context, it is worth recalling that Israel, in cooperation with Greece and Cyprus, signed an agreement in Athens in January 2020 to begin construction of the EastMed pipeline. With a planned length of 1,900 km, it would be the world’s longest subsea gas pipeline. Its launch was expected in 2025–2026. The project’s authors anticipated that Israeli gas would be supplied to Europe via this route. EastMed, with a capacity of 10 billion cubic metres per year, was expected to play a crucial role in supplying gas to Italy and other Southern European countries. However, the project failed to gain sufficient support from the US and, most importantly, Europe, and never reached the implementation stage.

Thus, Azerbaijan’s involvement as a reliable partner, maintaining stable relations with both Israel and Türkiye, becomes particularly significant in the context of supplying Israeli gas to Europe. Against the backdrop of growing demand for energy resources, this will not only strengthen Azerbaijan’s position in the global market but also enhance regional energy security. Ankara, for its part, is enhancing its transit capabilities and solidifying its role as a key gas hub.

Integrating Israeli gas into the existing Southern Gas Corridor system will require significant economic and political decisions, meaning it will take considerable time. Nevertheless, SOCAR’s entry into the upstream sector in the Eastern Mediterranean opens new prospects for both the company and Azerbaijan in shaping Europe’s energy map.

All Roads Lead to the Hub

However, Azerbaijan may soon face a serious competitor in the form of Turkmenistan, which, after years of hesitation, has decided to begin exporting its own gas to Türkiye. A contract was signed on 10 February 2025 between Turkmenistan’s and Türkiye’s state companies, Turkmengaz and BOTAS. According to the agreement, gas supplies will begin on 1 March this year. Specific details regarding volumes and transit conditions through Iran have not been disclosed.

Türkiye consumes over 50 billion cubic metres of gas annually and, in addition to its own production, imports pipeline gas from Russia, Azerbaijan, and Iran, as well as LNG from various suppliers. Through the deal with Ashgabat, Ankara will strengthen its economic and geopolitical power, while the EU will gain a new source of energy resources, ensuring supply diversification and enhancing energy security.

Commenting on the new agreement, Türkiye’s Minister of Energy and Natural Resources, Alparslan Bayraktar, described it as a historic step. He noted that the signing of the document was a concrete result of a memorandum of understanding on developing cooperation in the gas sector between the two countries. “This agreement, which we have worked on for many years, will strengthen the security of natural gas supplies for our country and the entire region, as well as advance strategic cooperation between Türkiye and Turkmenistan,” Bayraktar stated.

Gurbanguly Berdimuhamedov, Chairman of Turkmenistan’s Halk Maslahaty, revealed that Turkmen gas supplies to Türkiye would be organised through Iran under a swap scheme. Earlier, Bayraktar had stated that Türkiye could purchase up to two billion cubic metres of gas annually from Turkmenistan. The actual figures will become clear very soon.

The partnership between Turkmenistan and Türkiye, with the possibility of transit through Iran, demonstrates the dynamic development of energy ties in the region and could significantly impact the global energy market in the future. Should Azerbaijan be concerned about this agreement? Unlikely. Global gas demand is growing, and there will be consumers for every producer. Azerbaijan, with its stable and expanding supply routes to Europe, remains a key player in this market, and its cooperation with Israel and Türkiye will only strengthen its strategic importance.