Over $18 billion in investment may be required to increase gas exports from Azerbaijan to Europe: Fitch Solutions

Annual gas exports from Azerbaijan to the European Union (EU) may require $18.5 billion to reach 20 billion cubic meters, noted a country report by Fitch Solutions, which is a company under the Fitch Group, News.az reports.

The report states that it is unclear whether Azerbaijan will be able to double its natural gas exports (under the second phase of development of the Shah Deniz gas-condensate field - ed.) to the EU by 2027, as agreed in 2022.

“In order to reach the targeted 20bcm annual export volumes, Azerbaijan's pipeline infrastructure will have to be expanded - expanding the existing pipeline network by the requisite volumes is estimated to cost USD18.5bn,” the report states.

Fitch Solutions experts believe that the Azerbaijani government and SOCAR are unwilling to use the State Oil Fund of the Republic of Azerbaijan (SOFAZ) capital (equivalent to around 70% of GDP) to pay for the expansion without watertight assurances from the EU that Net Zero policies will not render them useless in the medium term.

It is noted that due to the Paris Agreements conditions on investments in new hydrocarbons projects, Azerbaijan could struggle to find investors to help finance the pipeline expansion unless the pipelines are built to transport green hydrogen too.

"If the pipeline expansions are agreed, with the hydrogen compatibility ensured, Azerbaijan could receive financing assistance from the European Bank of Reconstruction and Development and the European Investment Bank, alongside other financial institutions," the report emphasizes.

Recall that the transportation of Azerbaijani gas to Europe via the Trans-Adriatic Pipeline (TAP) began on December 31, 2020.

TAP represents the European segment of the Southern Gas Corridor (SGC), a complex energy value chain facilitating the delivery of natural gas from Azerbaijan's Shah Deniz gas-condensate field to Europe, under the second phase of its development.

The section of the Trans-Adriatic Pipeline (TAP) passing through Greece is 551.5 kilometers long, making it the pipeline's longest segment. It begins in the village of Kipoi on the Greece-Türkiye border and ends southwest of Leropigi village near the Greece-Albania border. This section also includes two compressor stations near Kipoi and Serres. The first station in Kipoi was built and commissioned for the transportation of 10 billion cubic meters of gas. The station in Serres is planned to increase the pipeline's capacity to 20 billion cubic meters.

The portion of the TAP pipeline that runs through Albania spans 215 kilometers on land and an additional 37 kilometers in Albania's Adriatic Sea sector. A measurement station has been constructed near the village of Bilisht, close to the Albania-Greece border, and a compressor station has been built in Fier, located 400 meters from the coast. The pipeline reaches the Adriatic coastline 17 kilometers northwest of Fier.

News.Az