Compressor firms to prosper from Germany–Azerbaijan natural gas deal

Socar, the state oil company of Azerbaijan Republic, is to supply natural gas to Securing Energy for Europe (Sefe) under a 10-year deal with deliveries due to start this year.

The annual quantity will gradually increase to 15 terawatt hours (TWh), which is approximately 1.5 billion cubic meters (bcm). 

The partnership will support investments in production and infrastructure such as gas compressors, increasing the amount of pipeline gas coming to Europe and ensuring the continent’s security of supply.

Dr Egbert Laege, Sefe CEO, said, “With this partnership, we are establishing a new route for significant gas volumes to reach Europe, thereby diversifying our portfolio and increasing the security of supply of our customers.”

Rovshan Najaf, Socar President, said this agreement marks another significant milestone in its commitment to enhancing Europe’s energy security. 

“By supplying reliable and substantial natural gas volumes to Sefe, we are strengthening the partnership between Azerbaijan and Germany, contributing positively to Europe’s energy diversification goals and sustainable growth,” he said.

Speaking at the Gas, LNG and Future of Energy Conference in London, Frederic Bernaud, Chief Commercial Officer of Sefe, said, “We need to cater for replacing Russian gas and energy, even in a peace process, because that will take time to come back in any case.”

He added that it needs to plan for growth in the wider Asian market and secure diversification of supply, amid ongoing geopolitical and market challenges.

Sefe signed a heads of agreement with Delfin Midstream in March, for the supply of 1.5 million tonnes of LNG per year for at least 15 years.

LNG will be sourced from floating LNG (FLNG) vessels that Delfin is deploying approximately 40 miles offshore near Cameron, Louisiana, on the US Gulf Coast.

The global LNG market will continue to grapple with “structural volatility” as European dependency on LNG increases, delegates in London heard today. 

With 175 mmtpa of LNG under construction, and more FIDs to come, the market consensus is that price cyclicality will continue.