Q&A: Azerbaijan ready to increase gas supplies to int'l market if investment made

By Azernews

By Ayya Lmahamad

Shifts that are taking place in global geopolitics directly affect the situation on the energy track. Today the energy market is going through very difficult times with a very high level of volatility and this is highly reflected in the European market. The current situation in the world showed that the EU’s dependence on energy imports is critical, as is its dependence on a single supplier. Now it is either impossible to reduce this dependence, or it is plausible but comes at a high cost.

Q: What is behind the current gas shortage/crisis in the world market?

A: We should bear in mind that the problems on the EU energy map are reflected on the global energy map. Because when there is an acute shortage of gas in a certain region, this region needs to look for new suppliers, and if these supplies are reoriented to a new market, problems arise in the former market.

At the same time, one of the main reasons why now there is insufficient gas in the world market is simply because leading economies and investors do not want to invest in the development of new gas sources. Europe set a goal to develop alternative energy sources, reduce traditional gas usage, and transit to green energy. However, we can see that the implementation of projects related to alternative energy is severely stalled, and the countries do not tend to invest much in the oil and gas sector.

Speaking at the official opening ceremony of the 27th International Caspian Oil & Gas Exhibition on the sidelines of the Baku Energy Week, Azerbaijani President Ilham Aliyev stated that now there is a need to build new bridges, build new connections into connectors and work toward the expansion of the country’s gas presence on the European market.

He underlined that there is a need for contracts, for the beginning and speeding up negotiations, for the work with traditional partners, investors and energy companies, as well as for the expansion of existing facilities.

Q: What is Azerbaijan’s promise to energy-hungry nations?

A: Azerbaijan has enough gas reserves in order to increase gas supplies to the world market, but what is needed is investments and infrastructure projects. President Aliyev in his speech stressed that "Azerbaijan is thinking about the expansion now as there is a demand for that, but this will take time, take a lot of financial resources, close coordination, cooperation and active dialogue with all countries involved".

“Taking into account that there are now new challenges, and new demands, of course, we are already in negotiations with other potential consumers. But for that, of course, only our efforts will not be sufficient,” he said.

There must be investments in infrastructure in Europe, building new interconnectors and of course, agreeing on the terms. Everyone knows that in the gas business, first, you sell the gas, sign the contract and then start to invest and extract. First, the buyers need to indicate what volumes they need and sign long-term supply contacts, as in order to decide how much should be invested in the development of the fields in Azerbaijan, it needs to be known how much buyers will import.

Aliyev, who has traditionally been against borrowing from foreign creditors, even said that Azerbaijan is ready to borrow funds from leading financial institutions there will be projects of global importance, and the projects that are important for Azerbaijan.

Q: Does Azerbaijan have enough gas reserves to increase its supplies to the world market?

A: Azerbaijan has already proved itself to be a very reliable supplier and player in the world market. In the first year (2021), Europe planned to import only 5 billion cubic meters of gas from Azerbaijan but ultimately received 8.1 billion cubic meters, and this year it is planned to increase the volume by some 25 percent.

In his speech, Aliyev revealed that last year Azerbaijan exported 22 billion cubic meters of natural gas, and this year the projection is 24 billion cubic meters, and the next year even more.

“There can be different figures depending on the activity of production and also on activation of other fields which are situated in the Azerbaijani sector of the Caspian Sea because our gas potential is not limited only with Shah Deniz,” he said.

He signaled that some of the gas fields are also very promising, adding that some of them will start production next year.

“So that will be an important contribution to energy security, especially now, when the demand for Azerbaijani hydrocarbons is more than ever before. And we, as a responsible country take that into account and we try to support countries which due to different reasons face difficulties,” he said.