S&P: Azerbaijan's gas production to increase by 7% through 2026

S&P: Azerbaijan
# 10 June 2023 12:10 (UTC +04:00)

"S&P Global Ratings" international rating agency has predicted that, unlike oil, Azerbaijan's gas production will increase by 2026, APA-Economics reports.

This forecast was included in the report of the international rating agency "S&P Global Ratings" on Azerbaijan.

The rating agency noted that most gas production ramp-up from the second stage of Shah Deniz has already happened and gas output will only slightly increase, by an additional 7% cumulatively, through 2026. The key South Caucasus Pipeline is operating at close to full capacity, so any additional net gas exports in the future, including to Europe, will require further expansion of the pipeline infrastructure.

However, S&P said in contrast with oil, the outlook is stronger for Azerbaijan's gas sector: "Production at the new Shah Deniz II gas field commenced in 2018, and two related pipelines--the Trans-Anatolian Natural Gas Pipeline and the Trans Adriatic Pipeline, carrying gas to Turkiye and Europe, respectively--became operational in 2019 and 2020. Consequently, we estimate that between 2017 and 2022, Azerbaijan's gas production rose by 90% to 34 billion cubic meters (bcm). Nevertheless, even considering this recent production ramp-up, we expect that gas exports will play a relatively modest role in Azerbaijan's economy compared with oil, and are unlikely to fully offset the oil production decline. We also note that European gas prices have moderated significantly from the highs exhibited in the second half of 2022 and have recently dropped below the levels experienced just before the start of the Russia-Ukraine war".