XRG Plans Investment in Azerbaijan’s Southern Gas Corridor

XRG, the international energy investment platform launched by ADNOC in November 2024, has announced the signing of non-binding Heads of Terms to acquire a stake in the Southern Gas Corridor CJSC (SGC) from the Ministry of Economy of the Republic of Azerbaijan. The announcement was made during the ADIPEC conference, marking another step forward in strengthening the strategic energy relationship between the United Arab Emirates (UAE) and Azerbaijan.

This move demonstrates XRG’s growing commitment to expanding its presence across the global energy sector, especially in regions with strategic significance to energy supply and diversification.

The new agreement builds upon the strong partnership between the UAE and Azerbaijan in the energy field. Both countries have been working closely to develop sustainable energy projects and enhance energy security across regions. The deal reinforces the UAE’s long-term strategy of building reliable energy links with key partners and reflects Azerbaijan’s growing role as a trusted energy supplier to international markets.

The signing of the Heads of Terms was witnessed by Dr. Sultan bin Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology, Executive Chairman and CEO of XRG, and Mikayil Jabbarov, Azerbaijan’s Minister of Economy and Chairman of SOCAR’s Supervisory Board.

The Southern Gas Corridor (SGC) is a key Azerbaijani energy holding company that was established in 2014. It manages significant gas-producing assets and operates a 3,500-kilometre-long pipeline network extending from the Caspian Sea through Türkiye to southern Europe. The pipeline system currently delivers up to 26 billion cubic metres of natural gas annually.

SGC’s infrastructure forms part of a vital energy route that supplies European nations seeking to diversify their energy sources and reduce reliance on single suppliers. The company also plays an important role in connecting Caspian energy reserves with European markets, making it a strategic asset for both Azerbaijan and its partners.

The proposed acquisition could potentially extend XRG’s existing collaboration with the State Oil Company of the Republic of Azerbaijan (SOCAR). It would broaden the partnership from upstream gas production into the transportation and delivery of natural gas to key European markets.

Currently, XRG holds a 30 percent stake in the Absheron gas and condensate field in the Caspian Sea, in partnership with SOCAR. Additionally, XRG owns a 38 percent interest in the offshore Block I gas concession in Turkmenistan. Earlier in 2024, SOCAR acquired a 3 percent interest in ADNOC’s SARB and Umm Lulu offshore oil concessions in Abu Dhabi, further strengthening mutual energy investments between the two nations.

The agreement is expected to contribute significantly to Azerbaijan’s economic growth. By attracting international investment, the country can further develop its energy sector and infrastructure, ensuring long-term benefits for both its economy and citizens.

For XRG, the acquisition aligns with its mission to support global energy security while investing in projects that offer reliable, sustainable, and diversified energy sources. It also fits within ADNOC’s broader vision to build international partnerships that deliver long-term value and resilience in the energy transition era.

The Southern Gas Corridor’s assets include stakes in major energy projects that form the backbone of Azerbaijan’s gas export strategy. These include participation in the Shah Deniz gas and condensate field, the South Caucasus Pipeline, the Trans Anatolian Pipeline (TANAP), and the Trans Adriatic Pipeline (TAP).

These pipelines collectively form one of the most important energy corridors connecting the Caspian region with Europe, ensuring the delivery of clean and reliable natural gas across continents. The company also holds shares in the Azerbaijan Gas Supply Company Limited, which facilitates efficient gas supply operations.

This latest agreement marks another step in the deepening energy and economic cooperation between the UAE and Azerbaijan. Both countries are committed to exploring new areas of partnership, including renewable energy, gas infrastructure, and investment in low-carbon technologies.

With ADNOC’s backing and XRG’s expanding portfolio, this partnership will help drive regional energy stability, support Azerbaijan’s role as a reliable energy provider, and strengthen the UAE’s position as a global energy investor.

As global energy markets continue to evolve, collaborations like this one will play a crucial role in ensuring diversified, sustainable, and secure energy flows between regions.