BAKU, Azerbaijan, December 5. Southern Gas Corridor closed joint-stock company’s (CJSC) Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) from gas transportation are expected to remain stable, Trend reports via Fitch.
“SGC's gas transportation segment benefits from strong revenue visibility as its revenue is secured by long-term gas transportation agreements with price indexation mechanisms. TANAP and TAP benefit from ship-or-pay provisions, largely eliminating volume risk. We forecast EBITDA from gas transportation to remain stable in absolute numbers but that its share in total EBITDA will gradually increase to around 80% in 2027 from around 60% in 2024,” reads the report released by Fitch.
SGC's upstream segment is exposed to gradual volume decline amid natural depletion of the Shah Deniz field. It is also exposed to gas and oil prices as a significant share of contracted gas volumes have linkage to commodity prices.
“We forecast upstream EBITDA will gradually decline over 2025-2028, and the share of upstream will gradually decrease from around 40% in 2024. This is due to projected decline in volumes and the Fitch-forecast decrease in Brent and title transfer facility (TTF) prices.”
Fitch analysts point out that SGC's market position is underpinned by Europe's gas source diversification efforts and political support for large projects, including TAP's exemption from certain provisions of the EU Gas Directive. SGC also benefits from access to growing market volume in Turkiye. TANAP and TAP have expandable capacity.