As the EU aspires to replace some 155 BCM of natural gas supply in a very short timeframe, viable and reliable sources, like Azerbaijan will play an important role, AzVision.az reports citing the International Gas Union (IGU).
Touching upon the recently signed memorandum of understanding on energy between the EU and Azerbaijan, the IGU said it welcomes this positive development for the long-standing Charter Member Azerbaijan.
"It is a clear step in the direction of enhancing global energy security and a rebalancing of tight gas and energy markets. Measures that enhance diversification of supply and increase market connectivity are good for energy security," the organization said.
IGU says that the world has been struggling with an unprecedented energy supply crisis and skyrocketing prices, which can only be reined in, once we return to a balance in global energy markets.
"The rebalancing will require new supply, and new supply requires long-term investments. Long-term investment decisions in energy infrastructure need to have a reasonable planning horizon for future demand projections. While the current policy environment is understandably focused on solving the immediate challenge to secure supply in the short term, longer-term thinking and realistic resources planning are also necessary for timely investments. Azerbaijan has said that it has strong potential to further develop its gas reserves and continue growing supply, as it has impressively done in the past decade – doubling its gas production, since 2011 -- this is an impressive achievement. However, to develop new supply, producers like Azerbaijan will be looking for certainty from consumers over the long-term, particularly as new infrastructure needs to be built, or investments to expand existing assets required," said the organization.
On July 18, 2022, a "Memorandum of Understanding on Strategic Partnership in the field of energy between the European Union represented by the European Commission and the Republic of Azerbaijan" was signed between Azerbaijan and the European Union.
The Sides agreed to support bilateral trade of natural gas, including through exports to the European Union, via the Southern Gas Corridor, of at least 20 billion cubic meters of gas annually by 2027, in accordance with commercial viability and market demand.
According to the document, any further exports of natural gas to the European Union beyond those that are being delivered to date will require significant investments in the expansion of the Southern Gas Corridor pipeline network and the upstream project development.
Moreover, the EU and Azerbaijan will encourage financing of the expansion of the Southern Gas Corridor pipeline network taking into consideration the EU’s climate policies and its REPowerEU strategy, including through cooperation with international financial institutions.