The European Union is expecting to receive more than 12 billion cubic metres per annum of additional gas supplies from Azerbaijan between 2023 and 2027 as it faces unprecedented pressure from Russia ahead of the next winter season.
During her visit to the Azeri capital of Baku on Monday, the European Commission's president Ursula von der Leyen signed a memorandum of understanding with the country’s President Ilham Aliyev, aiming to facilitate investments in the expansion of the transportation capacity of the Southern Gas Corridor (SGC) pipeline.
Last year, this pipeline delivered an estimated 8 Bcm of gas to European markets from foreign-led offshore gas developments in the Azeri sector of the Caspian Sea, mainly Shah Deniz.
The pipeline network runs for approximately 3500 kilometres across Azerbaijan, Georgia, Turkey, Greece and Albania to reach the eastern part of Italy.
Under the MoU, Azerbaijan and the EU aim to grow Azeri gas supplies to the continent to about 12 Bcm next year — up by almost 4 Bcm.
Investment in capacity expansion is expected to permit Azeri gas shipments via the network to reach 20 Bcm per annum by 2027.
The agreement also calls for both sides to take steps to reduce methane emissions in Azerbaijan's upstream sector and along the export pipeline route.
Speaking after the signing ceremony, Aliyev cheered European efforts to assist the country in transitioning towards using more renewable energy sources, such as offshore wind and onshore solar.
He said that switching the country towards renewable energy will reduce domestic demand for gas, potentially freeing up more molecules for export to Europe.
Meanwhile, von der Leyen said that the “EU remains firmly attached” to the region and hopes that Azerbaijan will build its reputation as a reliable and prominent supplier of energy to the continent to replace declining gas deliveries from Russia.
Von der Leyen said that Russia stopped being a reliable energy supplier even before the country invaded Ukraine in February 2022, prompting Europe to seek alternative supply routes.
Earlier on Monday, Germany's largest power utility Uniper said it has had to start drawing natural gas down from storage facilities in order to to meet customers’ demand, and is doing this instead of continuing to build storage volumes as the country’s market regulator had ordered.
Uniper and several other European customers of Gazprom have reported receiving so called “force majeure” notifications from the Russian gas giant, stating the unexpected inability of the company to supply gas via the subsea Nord Stream pipeline, usually running at about 170 million cubic metres per day of gas.
Gazprom reportedly blamed international sanctions for hampering its inability to ensure the maintenance and repair of powerful turbine-powered compressors running at the Portovaya pumping facility on the Baltic Sea shore, and thus shutting them.
The force majeure warning has amplified European concerns about Russia's intentions toward the Nord Stream gas, with the pipeline due to enter back into service following a maintenance shutdown.
"Uniper considers this to be unjustified and has formally rejected the force majeure claim," the company said in a statement.
Over the past weekend, Gazprom criticised Germany’s Siemens Energy over the delayed return to Portovaya of an overhauled gas turbine that was stuck in Canada because of sanctions.
The Russian company hinted that, without the turbine, it may be unable to restart operations of Nord Stream after 24 July when the pipeline is set to resume operations after a 10-day maintenance shutdown.
Moscow-based newspaper Kommersant said Canada had flown the pipeline turbine to Germany on Sunday, and it would be shipped onward to Russia before the end of this week.
However, a German economy ministry spokesperson, quoted by Reuters, said the turbine was not, in any case, due to be utilised until September at the Portovaya facility, so its absence could not be considered as the real reason for supply cuts, despite attempts to justify the supply squeeze this way.
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