Azerbaijan clearly reliable supplier of gas to EU - Oxford Institute for Energy Studies

AUGUST 01, 2022

Azerbaijan is clearly a reliable supplier of gas to the EU, Julian Bowden, Senior Visiting Research Fellow at Oxford Institute for Energy Studies (OIES) told Trend.

"The Southern Gas Corridor is working well: it is delivering gas into southern Europe & Italy, and helping those EU countries (Greece, Bulgaria and Italy) improve their diversity of supply," he said.

Talking about the recently signed memorandum of understanding between the European Commission and Azerbaijan, Bowden noted that the MOU refers to doubling the capacity of the SGC.

"Where is this supply to come from? If it is Azerbaijan, then we needed to see the upstream commitments yesterday. Filling this new SGC capacity by 2027 looks very hard if it is to be only Azerbaijani gas. That leaves Turkmenistan gas, delivered either by swap from Iran, or from a Trans Caspian pipeline," he added.

Bowden believes that if we can’t see the supply part of this chain being worked very soon, then it will not be possible to help Europe overcome the current gas supply crisis.

The analyst pointed out that overall, the MOU is aspirational, and the challenge now is very quickly moving the MOU into something more tangible. "There is still a lot of work to be done."

On July 18, 2022, a "Memorandum of Understanding on Strategic Partnership in the field of energy between the European Union represented by the European Commission and the Republic of Azerbaijan" was signed between Azerbaijan and the European Union.

The Sides agreed to support bilateral trade of natural gas, including through exports to the European Union, via the Southern Gas Corridor, of at least 20 billion cubic meters of gas annually by 2027, in accordance with commercial viability and market demand.

According to the document, any further exports of natural gas to the European Union beyond those that are being delivered to date will require significant investments in the expansion of the Southern Gas Corridor pipeline network and the upstream project development.

Moreover, the EU and Azerbaijan will encourage financing of the expansion of the Southern Gas Corridor pipeline network taking into consideration the EU’s climate policies and its REPowerEU strategy, including through cooperation with international financial institutions.