The last day of every year has become a special celebration for citizens of Azerbaijan – regardless of where they live, our people commemorate the “Day of Solidarity of World Azerbaijanis”. But December 31 also holds an important place in the economic history of Azerbaijan.
Starting from this date, Azerbaijan gained the opportunity to establish a new form of partnership with countries located far beyond its borders thereby strengthening future relations, elevating economic cooperation to a new phase, and creating a long-term platform for new collaboration.
Yes, we are talking about the date December 31, 2020. On that day, natural gas extracted from Azerbaijan’s largest-ever discovered gas field began flowing to European Union markets. Today, as we approach the fifth anniversary of stable Azerbaijani gas exports to Europe, this achievement continues to underscore the strategic importance of the country’s energy sector.
This year also marks another significant milestone – the 10th anniversary of SOCAR, through its subsidiary SOCAR Gas Operating Company (SGOC), assuming operatorship of the Azerbaijan Gas Supply Company Limited (AGSC), the marketing arm of the world-class Shah Deniz gas and condensate project.
Established in 2002 by the Shah Deniz partners and SOCAR, AGSC has spent the past decade successfully fulfilling its core responsibilities amid global geopolitical changes and disruptions in energy supply chains. In a relatively short time, it has expanded Azerbaijan’s gas export geography and achieved operational excellence that ensures the sustainability of long-term commercial relationships.
SOCAR’s operatorship of AGSC represents the first successful, cost-effective and strategically significant example of a national company realizing highly complex tasks for the benefit of the State of Azerbaijan and its international partners. This success laid the foundation for subsequent major responsibilities under SOCAR’s operatorship, including the South Caucasus Pipeline (SCP).
Access to European gas markets: Strategic and Economic Impacts
First and foremost, it enabled the development of Azerbaijan’s large-scale gas production. Official statistics illustrate this growth clearly: gas production increased from 28.6 bcm in 2017 (prior to Shah Deniz Stage 2 start-up) to 43.9 bcm in 2021, reaching 50.4 bcm by 2024. Export volumes similarly expanded, rising from 8.5 bcm in 2017 to 25.3 bcm in 2024. The 25-year long-term gas sales contracts signed in September 2013 were critical for the commercial viability of Shah Deniz Stage 2 with 62.5% of gas from Shah Deniz-2 (10 bcm per year) allocated to European consumers. The high liquidity and premium pricing of the European market made this capital-intensive project economically feasible and enabled Azerbaijan to advance development of deepwater reserves in the Caspian Sea.
Therefore, today’s success reflects the combined efforts of all project participants and the strategic vision of Azerbaijan’s leadership. It shows how gas produced from a geologically complex offshore field like Shah Deniz has become a cornerstone of both regional energy stability and international cooperation. By combining advanced expertise with growing national capacity, Azerbaijan has strengthened its leadership in critical components of the natural gas value chain – marketing and commercial operations.
Establishing a route for Caspian gas to reach Europe
However, delivering natural gas from an enclosed basin such as the Caspian, with no direct access to the open seas, to one of the world’s most attractive markets was not an easy task. Years of negotiations, strategic decisions and timely execution enabled the realization of the Southern Gas Corridor, one of the largest gas infrastructure projects of the 21st century, directly connecting Azerbaijan to European markets.
Azerbaijan’s leadership viewed gas not just as a commodity, but as a strategic tool for long-term regional and international cooperation, a perspective essential for the country’s energy security. Under the visionary guidance of President Ilham Aliyev, Azerbaijan established itself as a reliable regional and global energy partner. Baku developed a model of exemplary collaboration with project participants and transit countries while maintaining high trust and transparency in negotiations with European gas buyers.
Most importantly, the Southern Gas Corridor has evolved into a broad cooperation platform where interests of producers, transit countries and off-takers are properly balanced and working towards common goals of effective long-lasting cooperation for the benefit of all involved.
Thus, thanks to the strong political will and principled approach, Azerbaijani gas now flows to European markets through the 3,500 km Southern Gas Corridor, and Azerbaijan has become a significant and reliable partner in the gas markets. To understand how this happened in practice, it is worth taking a brief look back at the history of Azerbaijan’s entry into the European gas market.
Azerbaijan Becomes a Gas Exporter
The discovery of substantial Shah Deniz reserves quickly shifted attention to gas exports. On July 12, 1999, National Leader Heydar Aliyev stated at the presentation of the Shah Deniz discovery results that “our most favorable market is Türkiye.”
A gas sales agreement between Azerbaijan and Türkiye for Shah Deniz Stage 1 was signed on 12 March 2001; the Azerbaijani government approved the Stage 1 development plan on 27 February 2003. First production from the “Alpha” platform commenced on 15 December 2006, and on 3 July 2007 Shah Deniz gas was delivered to Türkiye – marking Azerbaijan’s transition from a net gas importer to an exporter. Until then, from October 2000 to 2007, Azerbaijan had imported gas from Russia to meet domestic demand. Shah Deniz production enabled Azerbaijan to fully cover its own needs and simultaneously export gas to international markets.
Azerbaijan’s gas exports since mid-2007 have once again confirmed that the Shah Deniz project was never intended to remain just a standard PSA contract. The development of this giant field significantly enhanced Azerbaijan’s regional role and laid the foundation for deeper, long-term engagement with the European countries.
When Did Azerbaijan Target the European Gas Market?
During Stage 1 drilling, it became clear that the gas reserves of Shah Deniz significantly exceeded the initial estimate of 600 bcm, with substantial additional volumes located in deeper offshore zones, which significantly raised development costs. Consequently, to enhance the project’s commercial viability, SOCAR and its partners prioritized selling the bulk of the new gas volumes into European markets and began evaluating long-term export routes.
By late 2011, Baku began taking concrete steps toward transporting Shah Deniz gas to Europe.
On December 24, 2011 Azerbaijan and Türkiye signed a memorandum of understanding in Ankara on constructing a new pipeline system for the transit of Azerbaijani gas to Europe.
On June 26, 2012, the Intergovernmental Agreement was signed on the Trans-Anatolian Natural Gas Pipeline (TANAP). On June 28, 2013, the Shah Deniz consortium selected the Trans Adriatic Pipeline (TAP) as the main route for transporting Azerbaijani gas to Europe.
On September 19, 2013, in Baku, the Shah Deniz consortium signed 25-year commercial gas sales agreements with nine European companies.
On December 17, 2013, the Shah Deniz consortium announced the final investment decision (FID) for Shah Deniz Stage 2. At the signing ceremony, President Ilham Aliyev stated: “A new format of cooperation is being created, which will cover more countries and companies. I am sure that in the future project, Shah Deniz-2 will cover a wider geographical area than currently envisaged.” Subsequent developments unequivocally affirmed the strategic foresight of President Ilham Aliyev.
Azerbaijan’s Expanding Gas Export Geography
Until December 31, 2020, Azerbaijan supplied gas directly only to regional markets – Türkiye and Georgia. From that date onward, Azerbaijani gas started reaching European consumers, initially in Greece, Bulgaria and Italy. After the commissioning of the Greece–Bulgaria Interconnector (IGB) in 2022 and start of transit operations via Türkiye using BOTAS-operated pipelines, Eastern European and Balkan countries, including Romania, Hungary, Slovakia, Serbia, Slovenia, Croatia, North Macedonia and Ukraine also became buyers of Azerbaijani gas.
Another important development occurred on August 2, 2025, when Azerbaijan entered the Middle East market by exporting gas to Syria via Türkiye. Thus, Azerbaijan now supplies natural gas to 14 countries.
Azerbaijan was able to expand its gas export geography rapidly, driven primarily by shifts in the global energy landscape.
Energy diplomacy also played a major role. On July 18, 2022, the EU and Azerbaijan signed the MoU on Strategic Partnership in the field of energy, formally strengthening Azerbaijan’s long-term presence and strategic role in the European gas market.
The Company Responsible for Selling Shah Deniz Gas
Another key factor behind the expansion of Azerbaijan’s gas export geography is effective marketing. Successful commercial operations open doors to new markets while strengthening existing partnerships. These responsibilities are carried out by the Azerbaijan Gas Supply Company (AGSC), operated by SOCAR Gas Operating Company (SOCAR GOC), with SOCAR continuously working to expand the geography and efficiency of gas marketing activities.
AGSC began gas sales in December 2006, coinciding with the first production from the Shah Deniz field. Initially, volumes were sold domestically, and even today, up to 20% of Shah Deniz gas covers internal demand.
As of November 30, 2025, AGSC has marketed nearly 260 bcm of Shah Deniz gas, of which approximately 51 bcm has been delivered to Europe and 140 bcm to Türkiye and Georgia.
Natural gas from Shah Deniz is transported through three interconnected systems along the 3,500 km-long Southern Gas Corridor, reaching more than 30 buyers across six countries and fulfilling diverse supply and transit obligations.
According to 2024 results, Shah Deniz gas accounted for a significant share of national consumption in several countries Georgia – 49%, Bulgaria – 35%, Türkiye – 18%, Greece & Italy – around 17% each.
These figures underscore AGSC’s strong and enduring partnerships across markets.
Since May 2015, SOCAR has served as the operator of AGSC, taking over from Norway’s Equinor (formerly Statoil). This year, therefore, marks the 10th anniversary of SOCAR’s operatorship of AGSC – a milestone that highlights the development of national capacity and the successful management of complex international commercial operations.
Over the past decade, under SOCAR GOC’s operatorship, AGSC – staffed entirely by Azerbaijani professionals – has evolved into a trusted global gas marketing company, playing a pivotal role in the Southern Gas Corridor value chain. It has become a reliable and efficient marketing platform, supporting domestic demand, reinforcing regional energy security, and ensuring stable gas supply to Europe.
AGSC’s confident entry into new markets demonstrates its transformation from a regional player into a responsible global energy partner. Its operational discipline, transparency, and commitment to long-term obligations have made AGSC an attractive counterpart for major market participants.
A small but highly skilled team of around 45 professionals manages an impressive portfolio of about 28 bcma, supported by a robust marketing structure that ensures secure supply, anticipates market dynamics, and delivers strong value to partners. This success reflects not only the team’s dedication and expertise but also by the deep industry knowledge and experience contributed by SOCAR, bp as the Shah Deniz Upstream operator, and other shareholder companies. Together, this collective strength has enabled AGSC to consistently reinforce regional and European energy security and position itself as one of the most trusted and proficient gas marketing organizations in the industry.
Conclusion
The journey that began with the South Caucasus Pipeline has evolved into the massive infrastructure known as the Southern Gas Corridor – one of independent Azerbaijan’s strategic national objectives. This achievement inspired confidence in the future. The project brought together thousands of specialists from multiple countries who designed terminals, laid pipelines, constructed offshore platforms, and deployed advanced technologies to extract resources from deep waters beneath the Caspian. Ultimately, they succeeded in connecting a landlocked Caspian basin to major global markets.
Through the Southern Gas Corridor, Azerbaijan’s energy strategy has become an integral part of Europe’s energy security. The Shah Deniz project – particularly its Stage 2 – was far more than a high-volume production initiative; it reshaped the country’s geo-economic landscape. As a result, Azerbaijan emerged as both the initiator of major regional projects and a vital contributor to Europe’s energy security. The development of long-term export routes, deeper economic cooperation with transit countries, and the establishment of a platform for future pipeline expansion have ensured the long-term sustainability of Azerbaijan’s gas exports and transformed the “big gas era” into a tangible economic asset.
These achievements represent not only the triumph of a new energy strategy, but also the beginning of greater future successes – a vivid manifestation of the strategic development concept founded by National Leader Heydar Aliyev and successfully implemented and developed by the President of the Republic of Azerbaijan, Ilham Aliyev.
