South Caucasus Pipeline Nears Capacity as BP Reports Q1 Volume Surge

The South Caucasus Pipeline moved an average of 63.5 million cubic meters of natural gas per day in the first quarter of 2026, up 4.4 percent from 60.8 million cubic meters per day in the same period of 2025, according to BP’s South Caucasus Pipeline operations data. The 691-kilometer line runs from Azerbaijan’s Sangachal terminal near Baku through Georgia to the Turkish border, where it connects to the Trans-Anatolian Natural Gas Pipeline (TANAP), the next section of what the European Union calls the Southern Gas Corridor (SGC).

Annualized, that daily rate produces roughly 23.2 billion cubic meters per year. The pipeline’s post-expansion design capacity is 24.04 billion cubic meters per year. Every European energy buyer added to Azerbaijan’s customer list since commercial deliveries to the continent began in December 2020 is now drawing from a corridor whose first link has almost no headroom left.

The Volume Jump, Quantified

• 63.5 mcm/day: Q1 2026 average throughput (Q1 2025: 60.8 mcm/day)
• 4.4%: year-on-year volume increase, 2.7 mcm/day in absolute terms
• $21 million: Q1 2026 operating expenditure for the SCP system
• $9 million: Q1 2026 capital expenditure

The data comes from BP’s quarterly report on the South Caucasus Pipeline Company (SCPC), the consortium that owns and operates the line. BP holds a 29.99 percent stake; the Southern Gas Corridor Closed Joint Stock Company, an Azerbaijani government vehicle, holds 21.02 percent; Lukoil and TPAO, Turkey’s state energy company, each hold roughly 19 to 20 percent; and NICO, a subsidiary of the National Iranian Oil Company, holds 10 percent.

BP was the pipeline’s technical operator until August 2021, when that responsibility transferred to SOCAR Midstream Operations, a fully owned subsidiary of SOCAR, Azerbaijan’s state oil company. BP’s quarterly report is published in its role as the lead consortium member, not as operator.

The SCP has been operational since 2006, carrying gas from the Shah Deniz field in the Caspian Sea to Azerbaijan, Georgia, and Turkey. A major expansion in 2018, known as SCPX, added a parallel 489-kilometer pipeline loop and new compressor stations in Georgia and Turkey, roughly tripling total system capacity to approximately 24 billion cubic meters per year. Commercial deliveries through the expanded section began for Turkish buyers in June 2018 and for European consumers in December 2020.

Approaching the Design Ceiling

The Capacity Arithmetic

Converting the SCP’s post-SCPX design capacity of 24.04 billion cubic meters per year to a daily figure, per the Southern Gas Corridor’s official SCP capacity specifications, yields about 65.86 million cubic meters per day. The Q1 2026 average of 63.5 million cubic meters sits at 96.4 percent of that ceiling.

Consistent data from BP’s own pipeline records rules out seasonal variation as an explanation. BP’s Azerbaijan pipeline page shows an average of 63.1 million cubic meters per day for the first nine months of 2025, already at 95.8 percent of design capacity. The Q1 2026 figure shows essentially no winter-demand drop. The system has run near its limit for well over a year.

In absolute volume terms, the pipeline handled approximately 5.7 billion cubic meters of gas in Q1 2026 alone. At the current daily rate, full-year throughput would reach roughly 23.2 billion cubic meters, leaving an annualized headroom of less than 900 million cubic meters before the design ceiling.

A Planned Expansion Now Parked

There was a proposal to push past that ceiling. The South Caucasus Pipeline Future Expansion project, designated SCPFx, appeared on the European Commission’s Projects of Common Interest list in 2020 and would have extended total system capacity toward 31 billion cubic meters per year. By the time the Trans-European Networks for Energy published its 2024 Infrastructure Report, SCPFx was listed as “not resubmitted.” The project is broadly considered shelved.

No active compressor station construction is under way along the SCP’s Azerbaijani or Georgian sections. Increasing the pipeline’s throughput meaningfully would require new compression infrastructure or a further pipeline loop, comparable to what the SCPX project added alongside the original 42-inch line. Without that investment, the system’s throughput ceiling is fixed.

Georgia’s Pipeline Cut

Under the Host Country Agreement governing the SCP’s passage through Georgian territory, the government of Georgia has the right to purchase up to 5 percent of all gas transited through the pipeline at a preferential price. That contract runs until October 2068.

At the current throughput rate, the 5 percent option right translates to roughly 3.2 million cubic meters per day, or about 1.16 billion cubic meters annually from the option gas entitlement alone. Georgia also holds a supplemental gas purchase agreement providing an additional 500 million cubic meters per year at discounted prices. Across 2025 and the first four months of 2026, Azerbaijan delivered 3.3 billion cubic meters of gas to Georgia, consistent with those combined contractual volumes, according to a statement by Azerbaijan’s Energy Minister Parviz Shahbazov at the Baku Energy Forum on June 3.

Georgia doesn’t produce meaningful natural gas domestically. The country’s Gas Transportation Company (GGTC) handles pipeline transit onward to Turkey and Armenia, while the Georgian Oil and Gas Corporation (GOGC) manages domestic distribution of the option and supplemental volumes. Higher SCP throughput improves that arrangement for Georgia, bringing more gas under the preferential purchase terms and more commercial activity along the 248-kilometer Georgian section of the pipeline.

Georgia’s dependence on Russian gas diminished substantially after the SCP’s original commissioning in 2006. The Host Country Agreement’s in-kind payment structure, valid through 2068, was central to that shift.

Europe’s Gas Target and the Infrastructure Arithmetic

The Expanding Buyer Network

Azerbaijan now supplies gas to 16 countries, 10 of them EU member states. The customer list expanded to include Germany and Austria in January 2026, following a supply agreement SOCAR signed with SEFE, a German state energy entity, under which SOCAR is to deliver up to 1.5 billion cubic meters per year for 10 years. According to the European Commission’s data on Azerbaijani gas supply diversification, deliveries to the EU via the Southern Gas Corridor increased by more than 40 percent between 2021 and 2024.

EU member states currently receiving Azerbaijani gas through the corridor:

• Italy, the largest buyer (Baku is Italy’s second-largest pipeline gas supplier after Algeria)
• Greece, Bulgaria, Romania, Hungary, Serbia, Slovenia, Croatia, Slovakia, North Macedonia
• Germany and Austria, added from January 2026

In 2025, the EU lost approximately 15 billion cubic meters of Russian pipeline gas when the Ukraine transit agreement expired. Brussels has no comparable alternative that bypasses Russian territory entirely. The Southern Gas Corridor does.

The 2027 Commitment

In July 2022, European Commission President Ursula von der Leyen and Azerbaijani President Ilham Aliyev signed a strategic energy partnership memorandum in Baku committing Azerbaijan to doubling its EU gas exports to 20 billion cubic meters per year by 2027. Azerbaijan’s actual EU-bound deliveries in 2025 totaled 12.8 billion cubic meters, a slight decline from 2024 and roughly 64 percent of the target.

TAP, the European section of the corridor, added 1.2 billion cubic meters of annual capacity from January 2026, per a Trans-Adriatic Pipeline capacity expansion announcement, bringing total TAP throughput to approximately 11.2 billion cubic meters per year. TANAP, the Turkish section, can comfortably absorb additional volumes. Getting those additional volumes into TANAP first requires an SCP that can carry them, and the SCP is already running close to its stated design ceiling.

Shah Deniz Output and the Supply Math

Shah Deniz, the sole field currently feeding the SCP, produced 27.9 billion cubic meters in 2025. A second development phase is ongoing, but BP has not publicly confirmed anticipated production volumes from the deeper reserves or a timeline for material output increases. If EU-bound flows are to reach that 20 bcm target, Shah Deniz output would need to grow substantially while the SCP carries well above its current design ceiling. The Oxford Institute for Energy Studies analysis of Southern Gas Corridor expansion potential projects that incremental Azerbaijani field development could add around 9.5 billion cubic meters of annual production by 2027, but notes that the market demand commitments needed to trigger SCP compression investment have yet to materialise at the required scale.

The volume gap is clear from the numbers. Hitting 20 billion cubic meters of EU-bound exports from 2025’s baseline of 12.8 billion requires roughly 7.2 billion additional cubic meters per year. Every cubic meter of that increment would first have to move through an SCP running at 96 percent of its design capacity.

Investment Signals at the Baku Energy Forum

Two days before BP published its Q1 data, the Baku Energy Forum convened on June 3 with the Southern Gas Corridor as a principal agenda item. Gio Cristofoli, BP’s Regional President for Azerbaijan, Georgia and Turkey, told delegates that world-class infrastructure already exists on the corridor and that the geopolitical environment reinforces Azerbaijan’s position as a regional energy hub. SOCAR used the forum to sign memorandums of understanding with Shell and JPMorgan, and a separate supply agreement for Azerbaijani gas exports to Turkey.

Forum participants formally called for urgent investment in infrastructure and logistics connectivity across the corridor. No Final Investment Decision on new SCP compression or pipeline looping was announced. The timeline between those investment calls and a committed construction schedule remains open.

Azerbaijan’s 20 billion cubic meter commitment to the EU runs to 2027.