Azerbaijan needs investment to boost European gas flows

Azerbaijan will need investment and long-term purchase commitments if it is to double its natural gas supply to the European Union, Azerbaijan’s deputy foreign minister Elnur Mammadov told the Financial Times in an interview published on November 3.  

“Whoever is interested in investing, whether it’s public or private, they [must] put their money on the table in order for us to be able to increase their capacities,” Mammadov told FT.

“I wouldn’t say that there is a disagreement [with the EU],” the Azeri official said, but added that investment is “an important part of this puzzle.”

Azerbaijan needs assurances that there will be demand for its gas in the longer term, Mammadov said.

The EU, for its part, is aiming to not only eliminate its reliance on Russian gas by 2027 but also to gradually start reducing its gas consumption in the long term through boosting renewables and energy efficiency measures.

This summer, the EU and Azerbaijan agreed to enhance their energy cooperation, including via a commitment to double the capacity of the Southern Gas Corridor to deliver at least 20 billion cubic meters of natural gas annually to the EU by 2027.

“This will contribute to the diversification objectives in the REPowerEU Plan and help Europe to end its dependency on Russian gas. Based on the strengthened energy cooperation, Azerbaijan is already now increasing deliveries of natural gas to the EU, from 8.1 billion cubic meters in 2021 to an expected 12 bcm in 2022,” the European Commission said in July.

The Greece-Bulgaria Interconnector (IGB) delivering Azeri gas was officially inaugurated last month. In his speech in Sofia at the commissioning of the IGB pipeline, Azerbaijan’s President Ilham Aliyev said that Azerbaijan had “started consultations with our partners” to potentially double the capacity of the TANAP and TAP pipelines, noting that without such efforts, “it will be difficult to provide additional supplies.”

Azerbaijan’s deputy foreign minister Mammadov told FT that it is expected that the EU will step up with funding, but he said he wasn’t aware of any sums being discussed yet.