HomeNewsWhy the volatile South Caucasus is important for gas and oil supplies

Why the volatile South Caucasus is important for gas and oil supplies

9/20/2023

(Reuters) - Azerbaijan is trying to take back control of Nagorno-Karabakh, a breakaway territory controlled by ethnic Armenians, in the latest escalation of a decades-old conflict.

Developments over Karabakh could alter the geopolitical balance in the South Caucasus, where Azerbaijan is a major energy producer. The region is criss-crossed with oil and gas pipelines, though none are in close proximity to Karabakh itself.

Here is a short description of energy infrastructure in the region:

Natural Gas

  • Azerbaijan has plans to increase natural gas exports to Europe.
  • Gas production from the Azeri-Chirag-Guneshli (ACG) fields totaled 13.4 billion cubic meters (bcm) in 2022, while 25.2 bcm was produced from the Shah Deniz gas project, where BP is leading an international consortium.

Oil

  • Azerbaijan's primary route for oil exports is the Baku-Tbilisi-Ceyhan (BTC) pipeline, which accounts for around 80% of country's oil exports and runs via Georgia and on to the Turkish Mediterranean coast. It has capacity of 1.2 million barrels per day, or more than 1% of global oil supplies.
  • Azerbaijan's total oil exports in January-July 2023 were 23.1 million tons (800,000 bpd), of which 76.3% flowed through the BTC. The country's oil output stood at 498,000 barrels per day in August.
  • Azerbaijan also exports oil via Russia through the Baku-Novorossiisk pipeline and via Georgia by rail, as well as a pipeline from Baku to Supsa in Georgia.

Nuclear

  • Armenia is home to the Metsamor nuclear power station, which is already in a precarious situation due to earthquake risk.

Azerbaijan exported 6.6 bcm of natural gas to Europe in January-July.

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