Moody’s affirms stable outlook for Azerbaijan’s key gas export project

Moody’s Ratings has assigned long-term issuer ratings to the Southern Gas Corridor CJSC (SGC), a state-owned company engaged in the production of natural gas and gas condensate in Azerbaijan, as well as their sale and transportation to regional and European markets.

The company has been assigned long-term issuer ratings in both local and foreign currency at Baa3, along with a baseline credit assessment (BCA) of baa3. The outlook on the ratings has been assessed as “positive,” Caliber.Az reports per local media.

The agency said that the Baa3 rating and positive outlook are aligned with Azerbaijan’s sovereign rating, reflecting the company’s strategic importance in advancing state interests in flagship gas projects, as well as its direct and indirect state ownership and a demonstrated track record of support, including guarantees.

Currently, 49% of SGC shares are directly owned by the state, while the remaining 51% belongs to the State Oil Company of Azerbaijan Republic (SOCAR), a fully state-owned integrated national oil and gas company. Although the state plans to sell a minority stake in SGC to XRG, the international investment arm of the Abu Dhabi National Oil Company, by the end of 2026, Moody’s expects that the government will retain control and strategic influence over the company’s operations and policy.

Moody’s therefore considers SGC a government-related issuer under its rating methodology, noting that the assessment incorporates a Baa3 standalone credit profile, Azerbaijan’s Baa3 foreign currency sovereign rating, a very high correlation of default risk between the company and the sovereign, and a strong likelihood of extraordinary state support in the event of financial distress.

The agency also expects SGC to maintain stable financial performance and profitability, supported by a growing contribution from its midstream segment (gas transportation). It added that elevated oil and gas prices are likely to further strengthen the upstream segment (exploration and production) in 2026.

Moody’s further noted that long-term volume risks linked to the natural decline in output at the Shah Daniz field are being partially offset by an ongoing investment program aimed at sustaining production from 2029 onwards. Additional gas supplies from other Azerbaijani fields could also help maintain pipeline utilisation over the longer term.

By Vafa Guliyeva