Azerbaijan's tightening gas balance

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Report summary

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.

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    Azerbaijan's tightening gas balance

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Table of contents

  • Executive summary
  • Azerbaijan’s domestic gas market is increasingly tight
  • Oil recovery will be prioritised over gas sales
  • Export-focused Shah Deniz Phase Two is on schedule
  • Limited near-term supply available for expanding domestic market
  • Domestic market must be incentivised for pre-FID projects
  • Near-term gas imports will be substituted by new sources of supply in 2020s

Tables and charts

This report includes 7 images and tables including:


  • 2015-16: Azerbaijan – key gas sector developments
  • 2015 energy demand by fuel
  • Gas demand by sector (2010-30)
  • Gas supply-demand balance (2015-30), excluding pre-FID projects
  • Potential post-2020 supply shortfall
  • New post-2020 sources of supply
  • Absheron: comparison of delivered costs (US$/mmbtu)

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