German energy ministry talks on prospects for buying gas via Southern Gas Corridor

By Leman Mammadova

Germany, like most European countries, supports the implementation of large-scale energy projects by Azerbaijan.

Germany plays an important role in Azerbaijan-EU energy cooperation. Azerbaijan declared itself in the international arena as a guarantor of Europe’s energy security, and this fact is very important and valuable for Germany as the leading country of the European Union.

The German Federal Government welcomes the construction of the Trans Adriatic Pipeline (TAP), which is a part of the Southern Gas Corridor, envisaging Azerbaijani gas supply to Europe, German Federal Ministry for Economic Affairs and Energy told Trend.

"Azerbaijan has opened the Southern Gas Corridor for EU Member States with its natural gas supply contract via the TAP gas pipeline. But the purchase of gas lies entirely in the hands of the companies," said the ministry.

Federal Ministry for Economic Affairs and Energy also talked about the prospects for German companies’ more active involvement in Azerbaijan’s oil and gas sphere.

"We know that SOCAR is the main player in the Azerbaijani oil and gas sector and that Azerbaijan is pursuing an ambitious investment program in the Azerbaijani oil and gas sector over the next few years. Whether German companies will cooperate and invest in the Azerbaijani oil and gas sector is, however, entirely up to their decision. The German Federal Government has no influence on the investment decisions of German companies," said the ministry.

The main share of Azerbaijan's exports to Germany is oil and oil products.

The Federal Ministry said that for Germany in 2018 (including November), Azerbaijan was the ninth-largest supplier of crude oil. Oil imports from Azerbaijan increased compared to 2017 and amounted to 2.7 million tons (2017: 2.45 million tons), according to the ministry.

The Southern Gas Corridor, $ 40 billion worth project, envisages the transportation of 10 billion cubic meters of gas to Turkey and Europe through the pipeline, which will be operated within the second stage of the Shah Deniz gas condensate field project in the Azerbaijani sector of the Caspian Sea.

The Southern Gas Corridor consists of four projects: Shah Deniz 2, Expansion of South Caucasus Pipeline (Baku-Tbilisi-Erzurum), the Trans Anatolian Pipeline (TANAP) and Trans Adriatic Pipeline (TAP).

The launching ceremony of the first stage of the Southern Gas Corridor was held in Baku on May 29, 2018, while opening ceremony of TANAP was held on June 12, 2018 in the Turkish city of Eskisehir.

Thus, the first gas from the Azerbaijani Shah Deniz field has already gone through the first segment of the Southern Gas Corridor - from the Sangachal terminal to the expanded South Caucasus Pipeline.

Recently, TAP and TANAP successfully completed their connection on the banks of the Merich River on the Turkish-Greek border.

It should be noted that very important aspects of cooperation related to the supply of gas to Europe, as well as the prospect of further ties in the energy sector were discussed in the framework of the visit of the German Chancellor Angela Merkel to Baku in August 2018.

The German Chancellor emphasized that Azerbaijan is an important country for the EU in terms of the diversification of Europe's energy security and the launch of the Southern Gas Corridor project will play an important role in ensuring Europe's energy security.

German energy provider Uniper is one of the buyers of Azerbaijani gas in the framework of the Shah Deniz-2 project and will purchase a total of 40 billion cubic meters of gas under the agreement.

Since January 1, 2016, Uniper had a spin-off with German E.ON company which was one of the nine European companies that signed an agreement with Shah Deniz consortium in September 2013 on purchasing Azerbaijani gas. The gas trading business is now in the responsibility of Uniper.

Uniper and SOCAR have been working in close cooperation for the past five years.

Uniper and SOCAR will collaborate on projects aimed at improving the energy efficiency of oil and gas production in Azerbaijan. The two companies signed an agreement on the same day with German Chancellor Angela Merkel’s trip to Azerbaijan.

The recently signed new agreement in the field of oil and gas production, energy efficiency, use of new technologies, optimization of energy consumption and reduction of carbon emissions will contribute to the development of this sphere in Azerbaijan.