Azerbaijan’s flagship US$40 billion Southern Gas Corridor development is on schedule and on budget for first gas by end-2018. It will fulfil the country’s strategic ambition of delivering Shah Deniz Phase Two gas beyond Turkey and into Europe. However, it will be dedicated to export markets, with no domestic sales. This comes at a time when a supply shortfall is expected in Azerbaijan. The country has been a net gas exporter since 2007, mainly to Turkey, but has recently discussed Russian imports for the first time in a decade. Domestic demand pressures do not threaten the outlook for Shah Deniz Phase Two. But, supply from pre-FID offshore developments is needed to avoid a longer-term shortfall.