BAKU, Azerbaijan, May 30. The European Bank for Reconstruction and Development (EBRD) may consider financing future expansion of the Southern Gas Corridor (SGC), Alkis Vryenios Drakinos, Director, Regional Head of the Caucasus for the EBRD, told Trend.
"Azerbaijan has been a long-standing partner of the EBRD for three decades. In the past, the EBRD supported the SGC through financing its key components. We understand that the capacity of the SGC is expandable, and should a decision be made to pursue this expansion by the Azerbaijani authorities, if approached, we could consider engaging with the project," he said.
The EBRD, as a transition bank, views climate mitigation and adaptation as essential transition processes, Drakinos noted. "Given this perspective, we acknowledge the challenges faced by hard-to-abate sectors in our countries. Therefore, we recognize a limited scope for fossil fuel investments, only if they can accelerate decarbonization".
He pointed out that to finance the project, it must align with the goals of the Paris Agreement and the bank’s stance on fossil fuels. "This includes strict adherence to criteria designed to mitigate the risk of carbon lock-in and promote low-carbon gas transportation. Potentially, any future cooperation on the SGC would perhaps need to demonstrate the capacity to transport low-carbon gases and ensure future-proofing of the infrastructure to accommodate these requirements," Drakinos explained.
"The EBRD is committed to ensuring that any investments we support contribute to a sustainable and low-carbon future. This means that projects like the expansion of the SGC must not only meet current energy needs but also be aligned with future demands for cleaner energy. By integrating these principles, we aim to support Azerbaijan in its efforts to achieve a swift and resilient energy transition," the official added.
Meanwhile, Azerbaijan initiated gas transportation to Europe through the SGC on December 31, 2020. This corridor facilitates the transport of gas from the Caspian Sea region to European countries, passing through Georgia and Türkiye. The project, with a total cost of $33 billion, is anticipated to recoup its capital costs within 8-10 years.
In July 2022, Azerbaijan and the EU reached an agreement to double the volume of gas supplies via the Southern Gas Corridor, from the current 10 bcm to 20 bcm by 2027.
