Azerbaijan Charts New Energy Direction Amid Caspian Uncertainty

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• Azerbaijan goals to capitalize on Kazakhstan’s shift a ways from Russian oil transit by expanding oil exports thru the Baku-Tbilisi-Ceyhan pipeline and doubtlessly reviving the Baku-Supsa pipeline route.
• Plans are underway to enhance pure gasoline transit, with Azerbaijan doubtlessly becoming a key hyperlink for Turkmen gasoline exports to Turkey by skill of swap affords and the attainable for a Trans-Caspian Pipeline.
• As smartly as to historical strength sources, Azerbaijan is exploring renewable strength style, with plans for wind and solar strength projects and looking for European investment to bolster its green strength sector.

Azerbaijan might perhaps prove a winner because the war in Ukraine continues to reshuffle the Caspian Basin strength-offer deck. But unsure investment and financing prospects, as smartly as questions about manufacturing capacity, are conserving Baku abet at characterize. 

In terms of oil exports, it seems Kazakhstan’s wretchedness might perhaps perhaps be Azerbaijan’s perform. Sooner than the Kremlin’s unprovoked invasion of Ukraine in 2022, Kazakhstan relied on Russia for transiting the bulk of its oil exports to market. In 2022, as an illustration, roughly 62 percent of Astana‘s 84.2 million hundreds oil exports reached global markets by skill of the CPC pipeline to Russia’s Sad Sea port of Novorossiysk. 

But growing fears about over-dependence on Moscow, alongside with issues referring to the protection of business transport in the Sad Sea, have resulted in Astana to glimpse substitute export routes. 

On March 11, Kazakhstan’s disclose oil producer KazMunayGas and Azerbaijan’s disclose oil firm SOCAR agreed to enhance their existing deal for transiting Kazakh impolite by skill of Azerbaijan’s predominant oil export route – the Baku-Tbilisi-Ceyhan (BTC) pipeline. The deal increases annual volume from 1.5 million tons to 2.2 million tons. The 2 firms also agreed to discuss transiting additional volumes of Kazakh impolite to the Sad Sea by skill of the Baku-Supsa pipeline thru Georgia which has been sluggish for over a Twelve months resulting from safety fears.  

The BTC possibility is a more refined route to market for Astana. The impolite is first shipped across the Caspian Sea by tanker, then fed into the pipeline which carries it to Turkey’s east Mediterranean wing from where it might perhaps perhaps probably per chance once more be carried by tanker to global markets.

Azerbaijan also might perhaps soon enhance transit volume for pure gasoline. A fresh preliminary agreement between Turkmenistan and Turkey permits for Turkmen gasoline to be despatched to Turkey both by skill of a swap take care of Iran, or more complex swaps by skill of every Iran and Azerbaijan. 

Turkish strength minister AlparslanBayraktar has stated that an preliminary stage provocative the initiating of up to 2 billion cubic meters (bcm) a Twelve months might perhaps be realized rapid. Turkey’s curiosity in Turkmen gasoline is primarily to diversify its have gasoline imports, of which final Twelve months 42 percent got right here from Russia contracts, most of which expire on the live of 2025. A contract with the country’s second greatest seller, Iran, is resulting from bustle out mid-2026. 

Both Russia and Iran are subjected to global sanctions, which if expanded additional might perhaps conceivably leave Turkey in a bind. Bayraktar also confirmed that Ankara and Ashgabat are discussing a longer-term aim of a dedicated Trans-Caspian Pipeline (TCP) to transit Turkmen gasoline by skill of Azerbaijan and Georgia to Turkey, and presumably on to Europe, a mission which already enjoys US give a take grasp of to. 

On-and-off talks on good this kind of pipeline have persevered for nearly about 25 years. Now, the route is once more off the abet burner, because the war in Ukraine has tremendously increased curiosity in diversifying European Union strength imports. Dusting off the TCP belief is in Baku’s pursuits, as it might perhaps perhaps aid Azerbaijan meet a 2022 commitment to Brussels to double EU-sure exports of its have gasoline to 20 bcm a Twelve months by 2027. Growth on assembly that be aware about has been halting, with Azerbaijani exports in 2023 totaling finest 11.8 bcm. Most up-to-date pipeline enlargement work is determined to add finest yet any other 1.2 bcm capacity per Twelve months. 

Azerbaijani officials insist that the sizeable investment required to enhance export routes can now no longer be made till European gasoline consumers commit to procuring for the additional gasoline carried by expanded pipelines. Gasoline consumers for his or her part are concerned that Azerbaijan might perhaps now no longer be ready to form the total necessary gasoline. 

The behind enlargement of Azerbaijan’s have gasoline manufacturing has been an anguish for would-be European importers. Of slack, Baku has had to import Turkmen gasoline by skill of a swap map with Iran to meet its have growing domestic ask, alongside with its export commitments to Europe, Turkey and Georgia. These Turkmen imports halted slack final Twelve months after Baku and Ashgabat did no longer agree on industrial terms for 2024. At the an identical time, Azerbaijani officials reported that the country had sufficient gasoline offers to meet ask resulting from a rise in domestic manufacturing.  

BP announced in slack February that new wells it has drilled in Azerbaijan’s predominant Shah Deniz gasoline discipline are for the time being producing an additional 750 million cubic meters per Twelve months. BP has also stated it hopes to commence manufacturing next Twelve months from a deep gasoline reservoir beneath the country’s predominant ACG oil discipline. Nonetheless, the firm has yet to enlighten how mighty gasoline it might perhaps perhaps probably per chance form, and it stays to be viewed whether or now no longer it might perhaps perhaps be sufficient to aid Baku meet its commitment to Brussels. 

Azerbaijan is also making a push to construct green/renewable strength. Residing to host a first-rate native weather conference in slack 2024 known as COP29, Baku is utilizing the opportunity to promote ambitious renewable strength plans. Azerbaijan’s curiosity in going green stems in tremendous part from its efforts to lessen its have domestic gasoline consumption to liberate more for export. Many strength analysts give it some belief can take grasp of a truly very long time for Azerbaijan to possess this kind of hopes. Simply 8 percent of Azerbaijan’s strength technology in February got right here from renewable sources, and good 1.3 percent of that whole became once derived from wind and solar strength. 

Following a March 16 assembly with Georgian High Minister Irakli Kobakhidze in Baku, Azerbaijani President Ilham Aliyev announced that a feasibility look of the two countries’ “mountainous renewable strength attainable” would be accomplished by the live of the Twelve months. He gave no info, however the look probably relates to plans announced slack 2022 for an electrical energy transmission cable to elevate strength generated in Azerbaijan across the Sad Sea to Romania, transiting Georgia. 

For that mission to turn out to be useful, Baku will first must construct sufficient wind, solar and hydro strength capacity to generate sufficient offers for export. Up to now, Baku has been unwilling to commit its have cash, relying as a substitute on global merchants similar to Saudi Arabia’s ACWA which is growing Azerbaijan’s first grid-scale wind farm, and UAE’s Masdar, growing its first main solar strength plant. 

It seems the EU is also drawn to growing Azerbaijan’s renewable strength capacity. On March 1, a ministerial assembly of the EU-Azerbaijan Inexperienced Energy Advisory Council resulted in the signing of a memorandum of belief on wind strength cooperation. The agreement is designed to facilitate European investment in “the massive wind strength attainable of Azerbaijan, to aid push forward the spruce strength transition in the gap, and to doubtlessly generate new renewable strength offers for Europe,” based fully on a EU Price assertion.

The assertion quoted the EU commissioner for strength, Kadri Simson, as announcing, “we have made spruce strength a key a part of EU-Azerbaijan bilateral kinfolk.”

By David O’Byrne by skill of Eurasianet.org

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