Azerbaijan’s energy resources as one of the key elements of Europe’s energy diversification

The ongoing geopolitical conflicts have changed the traditional energy map in Europe, and ensuring a safe, affordable, and reliable energy supply became very important to secure Europe’s future energy security. In this context, the European Union (EU) cooperates with trusted international energy partners to decrease its dependence on a single energy source and supplier. High dependence on the Russian natural gas became “the sword of Damocles” for the European energy consumers, and the volatility in the energy markets affected the European nations differently, depending on their energy mix.

The Republic of Azerbaijan, rich in crude oil and natural gas, is a close and reliable energy partner to supply energy resources from the Caspian region directly to Europe. Azerbaijan’s energy strategy and policy focused on the development of critical energy infrastructure to export its energy resources to global energy markets. Touching upon the EU-Azerbaijan energy cooperation, it is worth noting that the finalization of the inter-regional Southern Gas Corridor (SGC) project opened new opportunities for both sides. Rich natural gas reserves of the Caspian region are strategically important for the EU. Despite all difficulties and challenges, Azerbaijan completed successfully all segments of the SGC, and the first commercial natural gas to Europe entered on December 31, 2020 via the Trans Adriatic Pipeline (TAP). Since that period, Azerbaijan has been supplying natural gas to the European energy markets via TAP, which is the European leg of the SGC. This pipeline became a reality thanks to the active cooperation of all involved actors. It is noteworthy to mention that the Southern Gas Corridor Advisory Council, which was established in 2013 by the President of the Republic of Azerbaijan, Ilham Aliyev played a significant role in the efficient implementation of all measures related to the transportation of Azerbaijani natural gas to Europe along the SGC.

TAP pipeline became the first pipeline, supplying natural gas from the Caspian Sea directly to Europe. The project showed close cooperation and integration between regional actors such as Azerbaijan, Georgia, Turkiye and the EU. Azerbaijani natural gas is a valuable source for diversification because gas reaches South Eastern, Central, and Western Europe, which have a high dependence on a few suppliers.

Another significant element of the project is the point that the TAP project supports natural gas interconnectors across Europe. Azerbaijani natural gas deliveries create favorable conditions to develop gas interconnectors, which is a crucial element for Europe’s energy security. As noted by the President of Azerbaijan Ilham Aliyev during the inauguration of the Greece-Bulgaria Gas Interconnector in Sofia on October 01, 2022; “Azerbaijan is, for many years, a reliable oil supplier to international, primarily European markets, and now became a reliable gas supplier. Azerbaijan is proud to be the initiator of the Southern Gas Corridor. The IGB project will play an important role in strengthening the energy security of Europe and diversification of gas supplies”.

In recent years, the EU and Azerbaijan have deepened energy cooperation by signing the “Memorandum of Understanding on a Strategic Partnership in the Field of Energy” on July 18, 2022 in Baku. During the meeting, Commission President Ursula von der Leyen and Commissioner for Energy Kadri Simson with President Ilham Aliyev, both sides emphasized the importance of strengthening the existing cooperation. The MoU envisages doubling the capacity of the SGC to deliver at least 20 bcm of gas to the EU annually by 2027. This will contribute to the diversification objectives in the REPowerEU Plan and help Europe to end its dependency on Russian gas.

The MoU also supports the establishment of a long-term partnership on energy efficiency and clean energy between Azerbaijan and the EU. As noted by Commission President Ursula von der Leyen; “We are also laying the foundations of a long-term partnership on energy efficiency and clean energy, as we both pursue the objectives of the Paris Agreement”.

After signing this important document, Azerbaijan started to increase natural gas deliveries to the European energy markets. During the inauguration ceremony of the Serbia-Bulgaria Gas Interconnector in Serbia on December 10, 2023, President Ilham Aliyev confirmed once again Azerbaijan’s commitment to double its gas deliveries to Europe to 20 bcm by 2027. Given that, according to Minister of Energy Parviz Shahbazov; “Azerbaijan’s natural gas export increased by 5.3 percent in January-December of the last year. To this end, natural gas export was around 23.8 bcm in 2023. The country supplied 11.8 bcm of gas to Europe, 9.5 bcm to Turkiye, and 2.5 bcm to Georgia. During this period, the Trans-Anatolian Natural Gas Pipeline (TANAP) supplied 5.6 bcm of gas to Turkiye”. As can be seen, Azerbaijan is increasing natural gas export, and this tendency will also continue this year. In general, over 31 bcm of Azerbaijani natural gas has been supplied to Europe via TAP pipeline since its finalization. The main buyers of Azerbaijani gas in Europe are Italy, Greece, Bulgaria, Romania, Serbia, and Hungary but soon more countries will join to this list to boost natural gas imports from Azerbaijan.

Another success of Azerbaijan’s energy strategy is the development of green energy. As noted above, the signed MoU between the EU and Azerbaijan supports green energy cooperation, therefore the Azerbaijani government is focusing on the development of a long-term energy strategy that will reflect important areas such as electricity and natural gas supply, energy efficiency, and the use of renewables. This process will help the country produce electricity using renewable energy sources while decreasing the use of natural gas for electricity production. It will also diversify the Azerbaijani energy export, as the country will supply not only fossil fuels but also green energy.

Summing up, transforming the country into a “green energy hub” is a key component of Azerbaijan’s energy policy. The country closely cooperates with different energy companies to implement various green energy projects across the country. It should be emphasized that in parallel with the development of various green energy projects in the country, Azerbaijan also supports inter-regional green energy project. Towards this end, Azerbaijan, Georgia, Romania, and Hungary signed an “Agreement on the Black Sea Submarine Electricity Cable” project in Bucharest in December 2022. This agreement supports the underwater Black Sea electric cable project to supply electricity from the South Caucasus to Europe. This green energy project will connect the South Caucasus with Europe, involving the electricity systems of these countries. In essence, the project will serve as the “Green Energy Corridor”, which can also ensure a green energy supply from Central Asian nations to Europe in the future.

In the end, Azerbaijan’s role as a reliable energy partner and responsible member of the international community in the fight against global warming was also recognized by many countries, therefore the country won the backing from other Eastern European countries to host the 2024 UN Climate Change Conference (COP29) in Baku.

Shahmar Hajiyev

Senior Advisor at the Center of Analysis of International Relations

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