Baku, Sofia united by "Ring of Solidarity” Review by Caliber.Az

In recent years, Azerbaijan has been intensifying economic cooperation with the states of Southern Europe in every possible way. The priority of the Balkan states for Baku is quite obvious: this region is the basis of a long-term export strategy within the framework of the Southern Gas Corridor (SGC) project, there are also many opportunities for the supply of electricity and non-oil products.

In this context, the tendency of expanding Azerbaijani-Bulgarian ties on the gas track is very important, including the signing of a memorandum of cooperation between the operators of gas transmission networks in Bulgaria, Romania, Hungary, Slovakia and the State Oil Company of Azerbaijan (SOCAR). Energy became a key topic of talks during the working visit of Azerbaijani President Ilham Aliyev to Bulgaria on April 25.

A new page in Azerbaijani-Bulgarian business relations was opened on October 1, 2022, when cooperation between the two friendly states made it possible to implement a large-scale initiative in the energy sector - the Greece-Bulgaria Interconnector (IGB) was put into commercial operation, designed to supply Azerbaijani natural gas to the region. Azerbaijani President Ilham Aliyev along with the heads of state and government of the Balkan countries took part in the commissioning ceremony of the interconnector during a two-day official visit to Bulgaria.

The contractual volume of gas supplies via IGB is 1 billion cubic metres per year, and its total capacity reaches 3 billion cubic metres with the possibility of expanding volumes up to 5 billion cubic metres per year. According to recently published data from the operator company ICGB, since the start of operation of the interconnector (just over six months), over 8 million megawatt-hours (MWh) of "blue fuel", or approximately 758 million cubic metres of natural gas, have been transported through the pipeline from Azerbaijan.

Currently, the transmission system operator ICGB fulfills all obligations under long-term contracts for booking 1.57 billion cubic metres of gas, the company also noted that the pipeline currently provides about a third of the domestic consumption of natural gas in Bulgaria and allows it to be transported to a number of other countries region.

To recall, according to the Memorandum on Strategic Partnership in Energy between Azerbaijan and the European Union signed in July 2022, it is planned to double the export of Azerbaijani natural gas to more than 20 billion cubic metres by the end of 2027, which will increase the coverage of new countries with Azerbaijani gas supplies. To this end, the construction of new interconnectors has been accelerated in the countries of South-Eastern Europe, gas distribution networks are being modernised to increase the number of new states where Azerbaijani gas will be exported in the near future.

In the meantime, this year, the supply of Azerbaijani gas to Europe is planned at the level of about 12 billion cubic metres.

The next step towards expanding gas supplies through the Southern Gas Corridor and diversifying gas pipeline routes in the Balkan region was the working visit of the Azerbaijani leader to Bulgaria the day before, the negotiations held there and the agreements signed.

During the visit, the Presidents of Azerbaijan and Bulgaria - Ilham Aliyev and Rumen Radev visited the SOCAR office opened in Sofia, and also took part in the signing ceremony of the Memorandum of Understanding to promote cooperation between the State Oil Company of Azerbaijan and its partners - gas transmission system operators - the Bulgarian Bulgartransgaz, the Romanian - Transgaz, Hungarian - FGSZ, Slovak - Eustream.

The Memorandum signed by the energy ministers of the five states defines the areas of cooperation for the supply of additional volumes of gas from Azerbaijan to Europe through the modernised "Ring of Solidarity" (STRING). Bulgaria initiated the creation of the STRING system and this initiative was supported by the European Commission (EC) in order to improve the security of natural gas supplies to the European Union, in particular to the countries of South-East and Central Europe.

"The implementation of the Ring of Solidarity initiative will certainly strengthen energy security in Europe and allow Azerbaijan to increase gas exports to a much larger number of European countries," Azerbaijani President Ilham Aliyev said during the signing ceremony of the memorandum.

The head of state expressed gratitude to Bulgarian President Rumen Radev for promoting the STRING project, stressing that this initiative is an extremely important and timely step in further diversifying the supply of energy resources, and expressed confidence that all this will be another step in strengthening the Azerbaijani-Bulgarian cooperation. Ilham Aliyev also added that before the end of 2023, Azerbaijan plans to start supplying gas to Hungary and Slovakia.

Peter Szijjártó, Hungarian Minister of Foreign Affairs and Trade, welcomed the new opportunities for gas supplies within the "Ring of Solidarity" initiative. "The most effective solution to the energy crisis is the Azerbaijani gas supply to Europe, and to Hungary in particular - we are dependent on external sources, so diversification is important for us," he said.

Slovak Economy Minister Karel Hirman, who fully supported the new initiative, stressed that his country participates in the STRING project and has underground gas storage facilities and an extensive network of pipelines leading to the Czech Republic and Poland, and in this regard can become a promising partner for Azerbaijan, helping to distribute gas to other regions Europe.

“Today we are witnessing the formation of a new route for the supply of natural gas from Azerbaijan to Europe, and the implementation of the Ring of Solidarity project will significantly increase the transport potential in this region,” Azerbaijani Energy Minister Parviz Shahbazov said during the signing ceremony of the memorandum in Sofia.

According to the minister, the countries participating in the STRING project, due to a significant increase in transport capacities, can become an important link in alternative gas supplies both between the participating countries and in its transit to other European countries. At the same time, this project will provide Azerbaijani natural gas with access to additional markets through alternative routes.

"This initiative also presents opportunities for expanding the Southern Gas Corridor project, contributing to the implementation of the terms of the Memorandum of Understanding in the field of energy between the EU and Azerbaijan," Shahbazov said, noting that Azerbaijan plays a strategic role in reliable and stable energy supply to its partners for more than two years thanks to the SGC project.

In today's realities, it is very important to fully support the development of such infrastructure projects that ensure the delivery of natural gas from a reliable source to Europe and the diversification of supplies.

All these efforts met with full support and understanding both in Bulgaria and in the countries of the region, as well as at the level of the European Commission. Thus, the Chairman of the Energy and Water Regulatory Commission (KEVR) of Bulgaria Ivan Ivanov believes that cooperation with SOCAR is extremely important for Sofia: it will help increase gas imports from Azerbaijan, provide diversification of supplies and allow achieving healthy competition in the local gas market.

"Bulgaria currently receives 1 billion cubic metres of Azerbaijani gas through the IGB interconnector, and taking into account the agreements on increasing supplies, the volumes can be brought up to 1.2 billion cubic metres, and if necessary, increased even more," Ivanov emphasised.

In turn, the European Commissioner for Energy Kadri Simson, in a welcoming video message to the participants in the signing of the memorandum, stressed that Azerbaijan is a proven and reliable partner of the EU, and the memorandum signed in Sofia contributes to strengthening Europe's energy security.

Addressing the ceremony participants, the Azerbaijani leader emphasised that natural gas is far from the only energy product that Azerbaijan exports to Europe. “We have been a reliable partner as a supplier of crude oil for over 20 years, and petrochemicals and electricity are also part of our exports. Today we are working to turn Azerbaijan into a source of production and export of ‘green’ energy, the potential of which is estimated at about 200 gigawatts, including 157 gigawatts in the Azerbaijani sector of the Caspian Sea.

Contracts and memorandums of understanding have already been signed with leading international companies in the field of renewable energy with the expectation of producing more than 25 gigawatts from renewable energy sources (RES), construction of the first wind and solar power plants has begun,” President Ilham Aliyev said, noting that they will follow projects for the production of "green" hydrogen. The head of state stressed that the main export destination for Azerbaijan's "green" energy is Europe, with which Azerbaijan is connected by strong transportation lines: all this creates a completely new situation and actually redraws the energy map of Eurasia.