Marco Tonegutti: Europe needs additional gas volumes from Azerbaijan

Azerbaijan, through gas supplies via the Southern Gas Corridor (SGC), can play a key role in strengthening Europe's energy security, as the EU requires additional volumes of pipeline gas, managing director and senior partner at Boston Consulting Group (BCG) Marco Tonegutti told Report.

According to him, Europe's gas demand today is roughly 340 billion cubic meters per year, and even under the most optimistic electrification scenarios, it will remain above 300 billion cubic meters by 2030.

"The problem is that this demand is not supported by a reliable supply mix. About 90% of the gas consumed is imported, and nearly 45% comes from liquefied natural gas (LNG), mainly supplied by the United States and Qatar. The US is a reliable source but is exposed to Asian demand and price volatility. Qatar is actively expanding capacity; however, its LNG is largely oriented toward Asian markets," Tonegutti noted.

He emphasized that under these conditions, Europe needs additional volumes of pipeline gas. Currently, the main sources are Norway and North Africa. North Africa's potential for increasing supplies is limited. Gas imports from Russia, according to EU plans, will gradually be phased out by 2027.

"In this context, Azerbaijan and the Southern Gas Corridor can play a key role in enhancing energy security and maintaining Europe's competitiveness - both from an industrial perspective and in terms of affordability for households. In several countries, for example, Italy, electricity tariffs are set based on gas prices. Accordingly, rising gas prices automatically lead to higher electricity costs," Tonegutti said.

He stressed that it is crucial to increase supplies from the region, both through additional production in Azerbaijan and potentially via gas transit from Turkmenistan and Kazakhstan through Azerbaijan, further to Türkiye and Europe.

Tonegutti also highlighted Azerbaijan's cooperation with leading international energy companies, such as BP, TotalEnergies, and Exxon, as well as with Middle Eastern companies like ADNOC, Masdar, and ACWA Power.

"Azerbaijan's favorable business environment and its ability to accommodate the interests of diverse partners have become an important competitive advantage. We discussed supply and demand balance extensively - it is indeed important. But we should also emphasize other, non-physical factors. From an engineering perspective, increasing production and developing gas transport infrastructure are fully feasible - there are no technical constraints," he noted.

He added that attracting investments, both private and through public-private partnerships, requires key conditions: "First, commercial viability, including long-term gas supply contracts, which allow capacity expansion and provide investors with clear demand signals along the entire value chain, from production to transmission and sales. Second, a stable financial model. Projects must be attractive not only industrially but also financially. International oil and gas companies, national companies, and infrastructure funds need confidence in a stable financial framework and in the returns on their investments."

"And finally, all of this requires substantial political coordination, both at the regional level and in collaboration with the European Union and neighboring countries, including Kazakhstan, Turkmenistan, Georgia, Türkiye, etc.," Tonegutti said.

In 2025, gas supplies from Azerbaijan to Europe amounted to around 13 billion cubic meters, representing 4% of EU gas imports.