Abu Dhabi’s XRG seals stake in Azerbaijan’s Southern Gas Corridor

XRG, the international energy investment arm of Adnoc, has finalized a deal to acquire a stake in the Southern Gas Corridor, positioning itself for expansion in the Caspian region. The company obtained all necessary regulatory approvals for the equity shareholding it recently acquired from Azerbaijan’s Ministry of Economy, according to a statement on Tuesday.

The precise financial terms of the deal, first announced in November, have not been disclosed. The Southern Gas Corridor, stretching over 3,500km from Azerbaijan’s Caspian Sea sector through Georgia, Turkey, and into Southern Europe, comprises pipelines and gas fields. XRG's portfolio also includes interests in the Shah Deniz natural gas-condensate field in Azerbaijan, the South Caucasus Pipeline, the Trans Anatolian Pipeline, and the Trans Adriatic Pipeline.

This critical corridor has a capacity to deliver up to 26 billion cubic meters of natural gas per year annually, making it essential for supplying Southern Europe. The recent closure of the Strait of Hormuz due to the Iran conflict has underscored the corridor's importance as gas supplies from Qatar to global markets have significantly decreased.

With Europe striving to reduce its reliance on Russian gas amid the ongoing Ukraine conflict, the Southern Gas Corridor offers an alternative supplier. Mohamed Al Aryani, President of International Gas at XRG, stated that the completion of the deal marks a significant milestone in the company's strategy to establish an integrated and resilient gas position across the Caspian region.

XRG's role is to connect high-quality Caspian resources with established routes to expanding regional and European markets through its involvement in export infrastructure and upstream investments in Azerbaijan. Founded in 2024, XRG is a low-carbon energy and chemicals investment company with an enterprise value surpassing $80 billion.

The company has been investing globally to expand its operations, aiming to double its asset value over the next decade by capitalizing on energy transition, the growth of artificial intelligence, and the rise of emerging economies. XRG currently holds a 30% stake in Azerbaijan's Absheron gas and condensate field and a 38% interest in Turkmenistan's offshore Block I gas and condensate concession site.

The company has also entered the Venezuelan market, receiving a license to develop an offshore natural gas project in collaboration with BP and Qatar's UCC.