World Bank postpones approval of project to reduce gas leaks in Azerbaijan

The World Bank (WB) has once again adjusted the timeline for approving an investment financing project aimed at establishing a mechanism for detecting and eliminating gas leaks within the distribution network of Azerigas - a subsidiary of the State Oil Company of the Azerbaijan Republic (SOCAR), Report informs referring to the WB.

The total cost of the project is $15 million. Initially, the project was scheduled for review by the Bank's Board of Directors on April 23, 2026; it was subsequently moved to August 6, and has now been rescheduled for November 27.

The project will cover the entire country and will not involve financial intermediaries. The development objective is to reduce fugitive methane emissions from the gas distribution network operated by Azerigas, and to strengthen Azerigas' asset management capacity.

"Azerigas is a ring-fenced business unit of the State Oil Company of the Republic of Azerbaijan (SOCAR), with unbundled accounts, responsible for the distribution and sales of natural gas to the domestic market in Azerbaijan. The company is experiencing significant gas leaks (fugitive methane emissions) from its legacy assets, most of which are more than fifty years old, estimated at 160 million m3/year (107 kilotonnes per annum (ktpa) CH4). Analysis suggests that around eighty percent by volume of these gas leaks can be repaired with straightforward and cost-effective interventions within a 7-year time period. Using a global warming potential (GWP) factor of 28, this would result in greenhouse gas (GHG) abatement of 2.4 million metric tonnes per annum (mmtpa) CO2e. The project will establish a recipient-executed financial Facility for gas leak detection and repair (LDAR) in the gas distribution system operated by Azerigas," reads the statement.

"The Facility will be launched with an initial grant from the GFMR trust fund. SOCAR will be the Recipient of the grant and the holder of grant and Facility accounts, and Azerigas will be the sole beneficiary of the grant and the implementing entity responsible for day-to-day implementation and project management. The money will be reallocated from SOCAR to Azerigas for agreed leak detection and repair activities to reduce fugitive emissions of methane on a rolling basis. The project will build on learnings from Azerigas' pilot gas leak baseline program in Baku. Repair activities will be proposed and implemented by Azerigas according to the preliminary agreed eligibility criteria. Proposed activities will be prioritized based on cost, complexity, impact, and other relevant criteria to maximize the amount of emissions reduced per US$ deployed.

In order to guarantee a longer-term impact, a key aspect of the proposed financial Facility will be that the majority of financial benefits resulting from gas savings as a consequence of leak repair will be reinvested into the Facility, so as to mobilize additional capital to further rehabilitate Azerigas assets. Furthermore, the GFMR funds initially and the Facility subsequently will be used to build capacity within Azerigas to carry out monitoring, reporting, and verification (MRV) of emissions in line with the OGMP 2.0 standard. GFMR grant funding will enable activities that would otherwise not take place due to the strained and constrained financial situation of Azerigas, unlocking methane emission abatement action within the current decade."