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.