Moody's upgrades SGC's rating, cites Azerbaijan's growing EU gas demand

International rating agency Moody's has affirmed the senior unsecured foreign currency rating of Southern Gas Corridor CJSC (SGC) at Ba1 and changed the outlook from stable to positive.

Azerbaijan is benefiting from higher demand for its gas from the European Union, reflecting the bloc's initiatives to diversify supply sources and routes to reduce dependence on Russian gas, Caliber.Az reports quoting the agency's analysts.

"Over the past 1-2 years, Azerbaijan has signed several agreements with the European Commission as well as selected European economies for gas supplies. As a result, gas production and export volumes have increased significantly since 2022, with additional growth opportunities on the back of SGC pipeline exploration and expansion projects. In the hydrocarbons sector, increasing gas supplies will provide diversification from traditional reliance on oil, especially as oil production continues to decline due to depleting oil reserves," notes the analysts' report.

SGC is a special purpose company created by presidential decree in 2014. The Ministry of Economy holds a 51% stake in the company, while the State Oil Company of Azerbaijan (SOCAR) owns 49%. SGC was established to consolidate, manage and finance the state's interests in the development of the Shah Deniz gas condensate field, expansion of the South Caucasus gas pipeline, implementation of the Trans-Anatolian gas pipeline (TANAP) and Trans-Adriatic Pipeline (TAP) projects.