BAKU, Azerbaijan, May 22. The Strategic
importance of Azerbaijani gas for Europe’s energy security is
reinforced amid geopolitical tensions, Trend reports via
Moody’s.
The rating agency notes that the Southern Gas Corridor closed
joint-stock company’s business profile is underpinned by its fairly
large scale and integrated operations across the natural gas value
chain, encompassing interests in the upstream segment and critical
pipeline infrastructure.
“The scale, capital intensity and geopolitical significance of
SGC’s assets create high barriers to entry and enhance the
company’s operational resilience. Geographic diversification, with
transportation assets spanning multiple countries, further reduces
reliance on any single market and broadens the customer base. In
addition, intergovernmental and host government agreements provide
a robust legal framework for pipeline operations,” reads the latest
report by Moody’s.
Moody’s analysts note that SGC also benefits from a solid
presence in key markets, supported by strong underlying
fundamentals, reflecting sustained demand for Azerbaijani gas in
Turkiye and Europe.
“Demand is underpinned by Europe’s energy diversification
policies and political backing, as illustrated by TAP’s exemptions
from certain provisions of the EU Gas Directive. The strategic
importance of gas supplies from Azerbaijan for regional energy
security is further reinforced by ongoing geopolitical tensions
related to the Russia-Ukraine war and conflict in the Middle East,”
the report says.
At the same time, Moody’s notes that the SGC is exposed to the
more volatile upstream segment, with operational risks amplified by
its reliance on a single producing field.
“Shah Deniz is one of the world’s largest gas condensate fields;
however, it is a relatively mature asset that reached plateau
production at around 27.8 bcm in 2024 and 27.6 bcm in 2025 and will
likely hover around 27 bcm over 2026-27.
Longer-term volume risks associated with gradual production
decline because of natural depletion are mitigated by the $2.9
billion SD Compression project launched in 2025, which aims to
improve recovery rates and extend plateau production, with first
gas targeted in 2029. The participation of international oil
companies under the SD PSA, with BP acting as the field operator,
also adds to operational stability by bringing technical expertise
and experience. Moreover, potential gas supplies from the country’s
other gas fields should help maintain utilisation of the pipeline
infrastructure as SD enters natural decline,” the report says.
Data from Azerbaijan’s energy ministry reveals that in
January-March 2026, the country exported 6.5 billion cubic meters
of gas, including 3 billion cubic meters to Europe, 2.4 billion
cubic meters to Türkiye (of which 1.5 billion cubic meters were
transported via TANAP), 0.8 billion cubic meters to Georgia, and
0.3 billion cubic meters to Syria.
During the reporting period, Azerbaijan’s natural gas production
amounted to 12.6 billion cubic meters.
Production included 3.5 billion cubic meters from the
Azeri–Chirag–Gunashli field, 6.9 billion cubic meters from the Shah
Deniz field, 0.4 billion cubic meters from the Absheron field, and
1.8 billion cubic meters provided by SOCAR.
