SOCAR: What needs to happen to ship more gas to Europe

Azerbaijan is willing to supply more natural gas to Europe, but any further expansion of the Southern Gas Corridor will require long-term buyer commitments, financing and greater regulatory predictability, a senior SOCAR executive said at Baku Energy Week on June 2.

Nariman Shahsuvar, head of gas marketing at Azerbaijan’s state energy company SOCAR, said the corridor had already exceeded its initial objectives by lifting Azeri gas supplies to Europe from around 8bn cubic metres (bcm) in 2021 to more than 12.5 bcm now, an increase of roughly 60%.

But he said the pipeline system was approaching maximum utilisation, meaning any further increase in flows would require fresh investment in infrastructure, along with firm commitments from buyers and lenders.

“Azerbaijan is interested in supplying more gas,” Shahsuvar said. But he added that expansion could not be justified on political grounds alone and needed to be underpinned by commercial certainty.

The Southern Gas Corridor, a 3,500-km chain of pipelines linking the Caspian region with Europe, began delivering gas to European markets in 2020. Its development, including upstream production, platforms, processing facilities, pipeline expansion and related infrastructure, required around $40bn of investment, Shahsuvar said.

He said the project had been made possible by a combination of factors, including large gas resources, political support, long-term demand signals from buyers, and financing across the value chain from upstream production to final delivery.

The corridor became more important after Europe’s gas crisis began in 2021 and Russia’s subsequent invasion of Ukraine in 2022. Shahsuvar said. Before then, buyers had viewed alternative supply mainly through the lens of price, flexibility and diversification. Since the crisis, he said, secure gas supply had become a matter of national energy security.

The corridor carries gas from Azerbaijan through Georgia and Turkey, before connecting to Greece, Albania and Italy. Shahsuvar said it had also helped support further regional interconnections, including links from Greece to Bulgaria and from Bulgaria to Serbia, allowing Azerbaijani gas to reach more markets.

Azeri gas now reaches 16 countries. While the volumes remain small compared with overall European gas demand, he said they can make a significant difference for smaller markets that were previously dependent on a single supplier.

Shahsuvar said recent crises had shown that LNG alone was not enough to meet Europe’s security needs, and that reliable pipeline gas remained important. The availability of alternative supply routes and sources had helped markets cope better with recent disruptions, but pipeline gas continued to provide resilience, he said.

However, he warned that Europe’s own policy signals were complicating future investment decisions. Shahsuvar said buyers continued to seek more gas, but were often unwilling to commit to the long-term contracts needed to support multibillion-dollar infrastructure expansion.

He said uncertainty over the future role of gas in Europe, driven by climate targets, the green transition and regulatory changes, had made it harder for suppliers and financial institutions to assess new projects.

European methane regulations were also creating additional risk, Shahsuvar said. While SOCAR was ready to meet reporting obligations, he said buyers appeared to be trying to shift some regulatory risks onto suppliers.

For Azerbaijan, this means that further expansion of the Southern Gas Corridor would require a clearer long-term framework, including firm offtake commitments, financing, and clarity on regulatory obligations.

Shahsuvar said natural gas would continue to have a role in the energy transition, particularly as electricity demand rises from digitalisation, data centres, and transport. He argued that gas provides flexibility and backup for power systems with rising shares of intermittent renewable energy.

He said renewable energy could also form part of the broader corridor concept, including through initiatives linked to the Black Sea, but added that the existing Southern Gas Corridor would remain primarily a natural gas corridor.

Technically, he said, some low-carbon gases could be blended into the system, but this would require investment and technical adjustments across the value chain. For now, he said, policymakers and buyers needed to be realistic about the continuing need for natural gas.

“The market keeps asking for more gas,” Shahsuvar said. “The market needs to provide that certainty.”