Name: Azerbaijan's tightening gas balance
Brand: Wood Mackenzie
SKU: 49027
Price: 1350 USD
Availability: OnlineOnly
Author: Wood Mackenzie

Insight 07 September 2016

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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.

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 the following images and tables:

2015-16: Azerbaijan – key gas sector developments2015 energy demand by fuelGas demand by sector (2010-30)

Gas supply-demand balance (2015-30), excluding pre-FID projectsPotential post-2020 supply shortfallNew post-2020 sources of supplyAbsheron: comparison of delivered costs (US$/mmbtu)