XRG, a subsidiary of Abu Dhabi National Oil Company (ADNOC), which includes Abu Dhabi Development Holding Company (ADQ) and global investment firm Carlyle, has set the wheels in motion to join Southern Gas Corridor (SGC) CJSC, which delivers gas resources from the Azerbaijani sector of the Caspian Sea to the European market.
XRG’s signing of a non-binding heads of terms to acquire a stake in Southern Gas Corridor CJSC from the Ministry of Economy of the Republic of Azerbaijan is perceived as another building block in the growing strategic energy relationship between the United Arab Emirates (UAE) and Azerbaijan. SGC is a closed joint-stock company owned by the Ministry of Economy of the Republic of Azerbaijan and the State Oil Company of the Republic of Azerbaijan (SOCAR). The firm holds operating natural gas producing assets and a 3,500-kilometer pipeline network from the Caspian, through Türkiye to southern Europe, with the current capacity to deliver up to 26 billion cubic meters per annum. This agreement is interpreted to have the potential to contribute to Azerbaijan’s economic growth while reinforcing the country’s role as a reliable partner. The deal was inked by Dr. Sultan Al Jaber , UAE Minister of Industry and Advanced Technology and Executive Chairman and CEO of XRG, and Mikayil Jabbarov , Minister of Economy of the Republic of Azerbaijan and Chairman of SOCAR’s Supervisory Board. The acquisition potentially expands XRG’s collaboration with SOCAR from gas production to the delivery of energy resources to European markets, seeking to diversify sources of supply. The company’s holdings in the Caspian currently include its strategic partnership with SOCAR in the Absheron gas and condensate field , with a 30% stake.
While the firm also holds a 38% interest in the offshore Block I gas concession in Turkmenistan, SOCAR got a 3% interest in the SARB and Umm Lulu concession in Abu Dhabi from ADNOC in May 2024.
SGC’s assets include a participating interest in the Shah Deniz gas and condensate field, the South Caucasus Pipeline, the Trans Anatolian Pipeline, the Trans Adriatic Pipeline, and shares in Azerbaijan Gas Supply Company.
This comes after XRG withdrew its $18.7 billion non-binding indicative offer for Australia’s energy player Santos.