Azerbaijan's state energy company SOCAR has finalised a long-term gas supply agreement with French major TotalEnergies, Abu Dhabi's investment arm XRG (part of ADNOC), and Turkish pipeline operator BOTAŞ. The deal, announced during Baku Energy Week, secures future exports from the Absheron offshore field in the Caspian Sea, with deliveries expected to begin in 2029.
The agreement covers gas from the next development phase of the Absheron field, which lies approximately 100 kilometres southeast of Baku. A final investment decision on that stage is anticipated later this year. The field is estimated to contain around 350 billion cubic metres of natural gas and 100 million tonnes of condensate at a depth of 500 metres.
Bolstering the Southern Gas Corridor
This deal reinforces the Southern Gas Corridor, a pipeline network that transports Caspian gas to Turkey and onward to European markets. Since Russia's full-scale invasion of Ukraine in 2022, European governments have accelerated efforts to reduce reliance on Russian pipeline gas, making the corridor increasingly strategic. Brussels views Caspian supplies as a key component of its diversification strategy, alongside other initiatives such as AI and digital systems that optimise energy flows across the continent.
Azerbaijan has steadily increased its gas exports to Europe in recent years, positioning itself as a reliable alternative supplier. The country is already one of Turkey's main gas providers, and this agreement is expected to deepen that relationship as Ankara seeks to diversify its import sources beyond traditional routes.
SOCAR press secretary Emin Sevdimaliyev highlighted the significance of the deal: "SOCAR has signed an agreement with XRG, with TotalEnergies and BOTAŞ on the supply of Azerbaijani gas to Turkey, which is a major development. It will bolster the cooperation between different companies, Azerbaijan, Turkey, our foreign partners. And it also contributes to the importance of the Southern Gas Corridor."
Strategic Expansion for ADNOC
For ADNOC, the deal marks another international expansion through XRG, its investment platform. Abu Dhabi's growing interest in securing positions across global gas infrastructure reflects a broader trend of Gulf states investing in European energy security. This move aligns with similar efforts by European firms to diversify supply chains amid geopolitical tensions.
The involvement of TotalEnergies, a major European energy player, underscores the continued importance of French investment in the region. France has been a leading source of foreign direct investment in Europe, as highlighted by recent data from the Choose France summit, where President Macron unveiled €93 billion in commitments.
The Absheron field development is expected to require significant capital expenditure, with the partners sharing costs and risks. The deal provides long-term revenue certainty for SOCAR and its partners, while offering European buyers a stable source of gas outside Russian control.
As Europe navigates the transition to cleaner energy, natural gas is seen as a bridge fuel. The Southern Gas Corridor, now reinforced by this agreement, will play a crucial role in ensuring energy security for the continent in the coming decades.
