Why the Volatile South Caucasus is Important for Oil and Gas supplies

Credit: Elnur/AdobeStock
Credit: Elnur/AdobeStock

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:


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


- Azerbaijan's primary route for oil exports is the Baku-Tbilisi-Ceyhan (BTC) pipeline, which accounts for around 80% of the country's oil exports, and runs via Georgia and on to the Turkish Mediterranean coast. It has a 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.


- Azerbaijan has plans to increase natural gas exports to Europe.

- Gas production from the Azeri-Chirag-Guneshli (ACG) fields totaled 13.4 billion cubic metres (bcm) in 2022, while 25.2 bcm was produced from the Shah Deniz gas project. 

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


BP: The British energy giant operates ACG and Shah Deniz Projects on behalf of a consortium of energy firms, as well as the BTC pipeline. 

BP also has interests in the South Caucasus and the Western Route Export Pipelines and employs about 2,400 people. 

Equinor: The Norwegian firm has a 7.3% interest in ACG and an 8.7% interest in the BTC project. 

It also has a joint interest in the Karabagh and Ashrafi-Dan-Ulduzu-Aypara projects east of Baku alongside Azerbaijan's state energy firm SOCAR. 

 Exxon Mobil: The U.S. energy major has a 7% interest in ACG fields, and a 2.5% interest in the BTC pipeline. 

TotalEnergies: The Paris-based firm has a 50% interest in the Absheron field in Caspian Sea and a 5% stake in the BTC pipeline.

Azerbaijan https://tmsnrt.rs/48BvFPY

 (Reuters - Reporting by Vladimir Soldatkin and Sourasis Bose; Editing by Mark Trevelyan)

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