Rystad Energy: Azerbaijan’s gas production set to surpass oil output

Azerbaijan is poised to see its gas production outpace oil output in the near future, thanks to the implementation of several large-scale projects, according to Norway-based independent research company Rystad Energy.

Analysts at the company noted that the country’s gas sector is advancing rapidly, with expectations of a 51% increase in gas production by the end of the decade, reaching 40 billion cubic meters annually compared to 2020 figures, Caliber.Az reports, citing local media.

"Azerbaijan plans to develop several key gas and gas-condensate fields to further boost production. This growth will result in gas output surpassing oil production in the coming years. A significant boost to the gas sector came in 2018 with the launch of the second phase of the Shah Deniz project, which led to an 83% increase in commercial gas production from 2017 to nearly 36 billion cubic meters last year. Shah Deniz alone accounted for around 72% of the total gas production," Rystad Energy said.

As a result, gas exports have also surged, from 9.6 billion cubic meters in 2018 to approximately 24 billion cubic meters last year.

"About half of these exports were directed to Europe, with the rest going to Türkiye and Georgia. In the second half of 2022, Azerbaijan signed a memorandum of intent to increase gas exports to Europe to 20 billion cubic meters by 2027, with Shah Deniz playing a key role. To meet these additional volumes through the Southern Gas Corridor, Azerbaijan is considering doubling the capacity of the Trans-Adriatic Pipeline (TAP) to 20 billion cubic meters, increasing the capacity of the Trans-Anatolian Pipeline (TANAP) from 16 to 31 billion cubic meters, and expanding the capacity of the South Caucasus Pipeline from 24 to 31 billion cubic meters," the company added.

However, Rystad Energy highlighted that expanding these pipelines would require significant investments.

"Azerbaijan’s ambitions to increase gas exports will require long-term commitments and commercial agreements with European buyers. The implementation of these projects will depend on several factors, including economic conditions, alternative gas sources and supply routes to Europe, as well as potential geopolitical events," the company stated.

By Khagan Isayev