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As Europe facing energy supply crisis, Azerbaijani president calls for investments in new gas sources

2 June 2022 23:14 (UTC+04:00)
As Europe facing energy supply crisis, Azerbaijani president calls for investments in new gas sources

By Fuad Muxtar-Aqbabali

As a reputable and reliable energy supplier, Azerbaijan has reiterated its willingness to increase gas volumes to the global market amid the ongoing politically and economically volatile environment in the world.

Addressing the 27th International Caspian Oil & Gas Exhibition on the sidelines of the Baku Energy Week on 1 June, Azerbaijani President Ilham Aliyev emphasized the pivotal role of new investments and collective efforts in maintaining stable natural gas supplies to the world market from the Caspian basin.

President Ilham Aliyev revealed the amount of natural gas the energy-rich Azerbaijan exported in 2021 and forecasted the volume to be pumped to the international market next year.

“Last year Azerbaijan exported 22 billion cubic meters of natural gas, this year, the projection is 24, and the next year it will be even more,” the president struck a confident tone.

The figures can be different depending on the production and the use of other gas fields in the Azerbaijani sector of the Caspian Sea, the president said, adding that the nation’s “gas potential is not limited only to the Shah Deniz deposit” and other fields were also very promising.

In view of the current volatile situation in the global energy market, where energy prices are soaring almost on daily basis, the Azerbaijani leader let the audience know that the nation is determined to support countries facing difficulties.

The president signaled that “some of the gas fields will start production next year and that will be an important contribution to the energy security, especially now when the demand for Azerbaijani hydrocarbons is higher than ever before. We, as a responsible country, are taking that into account, trying to support countries, which face difficulties due to different reasons,” Ilham Aliyev added.

This resonates with the unease and anxiety of countries that are currently facing an energy crisis and once again demonstrates the importance of the Southern Gas Corridor in strengthening Europe’s energy security.

The president pointed to collective efforts, his government’s experience to this effect, and existing contacts with relevant actors - international financial institutions, energy companies, governments of leading countries, and the European Commission needed to increase gas production through the use of new sources and expansion of the capacities of the available gas pipelines to supply gas to European countries.

“Now we think about the expansion because there is a demand for that and that, of course, will take time, take a lot of financial resources, and also close coordination, cooperation, and active dialogue with all countries involved. We are ready for that. The Azerbaijani energy minister and Azerbaijani state oil company (SOCAR) have already got all my instructions and they are in the process of active negotiations," the president broke the news.

In light of the presence of officials from energy-hungry nations, oil and gas experts, and CEOs, the Azerbaijani president opined that the venue is the right for weighing the pros and cons of future contracts and projects.

“Baku Energy Week will be an excellent opportunity because we have guests - high-ranking officials from many countries - to address these important issues. At the same time, of course, we need to continue our active dialogue with members of the Southern Gas Corridor team, including governments,” the president added.

The Azerbaijani leader highly appreciated foreign governments' contribution to energy projects.

“I would like to express gratitude to the governments of Turkey, Georgia, Bulgaria, Greece, Albania, and Italy and participants in the Southern Gas Corridor for their active cooperation. Taking into account that there are new challenges and new demands now, of course, we are already negotiating with other potential consumers. However, our efforts alone will not be sufficient for the purpose. There must be investments in infrastructure in Europe, new interconnectors must be built and, of course, terms are to be agreed, because as we all know in the gas business, you first sell gas, sign the contract, and then start to invest and extract,” the president elaborated.

Alluding to his government’s capacity to shoulder most of the activities, Ilham Aliyev vowed.

“We will do all we can to speed up the process and it has already started”.

Aliyev thanked the U.S. and British governments for supporting Azerbaijan’s efforts. “With their great support, we have managed to achieve these results. I would like also to express gratitude to international financial institutions, World Bank, EBRD, the Asian Development Bank, EIB, and the Asian Infrastructure and Investment Bank”.

The Azerbaijani president, who has traditionally been against borrowing from foreign creditors, said Azerbaijan was ready to borrow funds from leading financial institutions "if we see that there are projects of global importance, and the projects are important for Azerbaijan".

Aliyev said that Azerbaijan was rapidly developing the production of renewable energy resources which would release additional volumes of gas for export. He also said that Azerbaijan's transit potential had not been fully used, apparently alluding to the hydrocarbon producers in Central Asia - Turkmenistan and Kazakhstan.

"Unfortunately, the potential of Azerbaijan as an important transit country was underestimated by potential suppliers, but I think now they have made up their mind because everybody understands that diversification is one of the important factors of energy security," Aliyev added.

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