Azerbaijan expects to further enter into European spot gas market

Azerbaijan, which has been exporting its gas to Europe for more than a year through the Trans-Adriatic Gas Pipeline (TAP, the European section of the Southern Gas Corridor), in 2021 was able to sell over 1 billion cubic meters of gas from Shah Deniz (mainly at the Italian gas hub Punto di Scambio Virtuale – PSV), hopes that such opportunities will be in the coming years, Report informs referring to an informed source in SOCAR.

The issue of selling gas from Shah Deniz on the free market is decided by the Azerbaijan Gas Supply Company, which, when TAP was launched, booked a pumping volume of 700 million cubic meters of capacity per year in it for possible excess gas from the field.

“In 2021, in accordance with the gas supply schedule under long-term contracts signed with nine companies in Baku in 2013, two companies actually did not receive gas (their time did not come according to the schedule). At the same time, production from Shah Deniz provided additional volumes of gas - the average production level was 70 million cubic meters per day. Given the announced capacity in TAP for an additional 700 million cubic meters and the availability of still free capacity in TAP, AGSC was able to sell over 1 billion cubic meters of gas on the spot market in 2021,” the source said.

According to contractual obligations, in 2021, Italy received 6.8 billion cubic meters of gas, and 1.2 billion cubic meters went to Greece and Bulgaria.

“In 2022, Europe can receive almost 11 billion cubic meters of gas from Shah Deniz. However, AGSC will probably not be able to match or exceed the 2021 target for gas sales on the spot market. The fact is that from July 2022, all long-term contracts signed with European gas buyers will begin to work in full. And the appearance of surpluses for export can only be if the production at this field in some periods exceeds the volumes contracted for export,” the source explained.

In general, it is expected that over 7 billion cubic meters of gas will be supplied to Italy under contracts in 2022, Greece will reach the contracted 1 billion cubic meters, and the volumes that Bulgaria will receive depend on the launch of the Interconnector-Greece-Bulgaria gas pipeline.

“We hope that in 2022 and in subsequent years we will still have the opportunity to sell Azerbaijani gas on the spot market: this is commercially profitable and actually makes it possible to fully use the potential of Shah Deniz, and in the future, other fields in the country,” the SOCAR source said.