Azerbaijan - one of key beneficiaries of high gas prices, increased demand in European region -Gazprombank

By Trend

Azerbaijan is one of the key beneficiaries of high gas prices and increased demand in the European region, Deputy Head of the Market Research Department at Russian Gazprombank Gulnara Khaidarshina told Trend.

According to Khaidarshina, the timely launch of the Trans-Adriatic Pipeline (TAP) contributed to increase gas exports to Europe amid the COVID-19 pandemic.

"The statistics haven’t yet covered the surge in demand and prices for gas in Europe in October, but in the first nine months of 2021, Azerbaijan's gas exports grew by 47 percent on annual basis (to 14.9 billion cubic meters), which is significantly better than 26.5 percent previously expected by us. In value terms, gas exports increased by 56 percent year-on-year over this period," she said. "The key importers of gas from Azerbaijan are Italy and Turkey, which account for 52 percent of the total exports. Besides, we see the expansion of gas exports to the European market. For example, exports to Spain and Portugal doubled over the reporting period, and to Croatia - by 48.7 percent."

"Moreover, in October a new contract was signed with Turkey for the supply of gas from the Shah Deniz-1 field after expiration of the previous agreement, which was in force for 20 years, in April (this explains the decline in exports to Turkey by eight percent in the nine months of this year). In this regard, the growth of gas exports is likely to accelerate in the fourth quarter as the needs of the European and Turkish markets increase in the cold season," the bank’s representative stressed.

"After the commercial launch of TAP in mid-November 2020 (after over four years of construction), gas was transported from the Caspian region not only to Italy but also to other countries of southern Europe, including Greece and Bulgaria. Besides, Serbia has recently announced the timing of connection to the TAP gas pipeline after the completion of construction and commissioning of the interconnector - the Serbia-Bulgaria gas pipeline section. Construction of this section will begin this year, and its commissioning is scheduled for 2023," Khaidarshina noted.

The design capacity of the TAP line is designed to export 10 billion cubic meters of gas to Europe per year (including eight billion cubic meters to Italy, one billion each to Greece and Bulgaria) in addition to six billion cubic meters for Turkey along the section TANAP, which will increase the export of natural gas, she reminded.

The Azerbaijani Energy Ministry expects that in 2022 gas supplies to Europe will reach ten billion cubic meters, which are envisaged by the design capacity of the gas pipeline.

"We forecast an increase of gas exports by 48 percent this year. Next year the growth in gas exports will normalize to ten percent. At the same time, the volume of gas exports will exceed pre-crisis levels by 28 percent," concluded Khaidarshina.