On 1 March 2024, Baku, Azerbaijan, became the focal point for a pivotal convergence in the energy sector: the 10th Ministerial Meeting of the Southern Gas Corridor (SGC) Advisory Council alongside the 2nd Ministerial Meeting of the Green Energy Advisory Council. The gathering represented a significant milestone in the cooperation of the European Union (EU) with the Republic of Azerbaijan while it also showcased how global energy strategies are dynamically evolving.
The SGC is a strategic pipeline project that transports gas from the Caspian Sea region to Europe. Since Russia’s re-inauguration of its war of aggression against Ukraine in February 2022, the SGC has become a critical component in reducing Europe’s dependency on Russian gas. Azerbaijan’s offshore Shah Deniz gas field is the corridor’s primary source of natural gas.
Amidst the backdrop of shifting geopolitical landscapes and the rise of political momentum for energy production from nontraditional sources, the meetings highlighted Azerbaijan’s strategic significance. The meeting in Baku underscored Azerbaijan’s pivotal role in enhancing European energy security through diversified gas supplies. However, its significance arises not just from its enormous natural gas deposits but also from its vast potential for wind power.
The meetings in Baku brought together representatives from 23 partner governments and 52 institutions and companies. They demonstrated continuing mutual commitment by the European Union (EU) and the Republic of Azerbaijan to their Strategic Partnership in the field of energy. EU Commissioner Kadri Simson’s attendance emphasized the importance of the partnership between the EU and Azerbaijan from the viewpoint in Brussels. This partnership covers cooperation in numerous practical policy areas including: assuring an affordable, stable and secure natural gas supply, promoting renewable-energy generation, enhancing, energy efficiency, exploring hydrogen production, reducing methane emissions, and guaranteeing environmental protection.
For example, the European Commission facilitated a Memorandum of Understanding (MoU) on wind-energy cooperation between Azerbaijan’s Renewable Energy Agency and the European industry association WindEurope. This MoU opens the door for European renewable-energy companies to participate in harnessing Azerbaijan’s vast wind-power potential, likely accelerating the increase of the share of nontraditional energy in the region and potentially supplying it to Europe.
Azerbaijan boasts the potential for 27 gigawatts (GW) of wind and solar power onshore, with an additional 157 GW of wind power in its offshore Caspian Sea sector. Azerbaijan has set the ambitious goal for such sources to constitute 30 percent of its total installed electricity capacity by 2030. This goal contributes to its excellent relations with the EU in view of the latter’s push toward nontraditional energy sources.
Thus the SGC, traditionally associated with natural gas, has evolved into a platform for cooperation that now encompasses renewables and electrification. The strategic partnership on wind energy illustrates the deepening of the cooperation, as nontraditional forms of energy become an equal aspect of their bilateral relations.
Natural gas remains, nevertheless, a signature commodity for the SGC. The Advisory Council reaffirmed the SGC as a reliable transmission system securing stable and economically competitive energy supplies for Europe from the Republic of Azerbaijan. In 2023, Azerbaijan exported approximately 12 billion cubic metres (bcm) of natural gas to the EU, representing a 45 percent increase since 2021. Overall, Azerbaijan exported about 23.8 bcm of natural gas in 2023 (a 5 percent increase over 2022) to the EU (11.8 bcm), Turkey (9.5 bcm) and Georgia (2.5 bcm).
The growth in gas exports to Europe follows on a July 2022 preliminary agreement between the EU and Azerbaijan, that foresees the doubling of gas flows by 2027 to at least 20 bcm per year (bcm/y), compared to the mere 8.1 bcm in 2021. Rising domestic consumption and infrastructure constraints in Azerbaijan may pose challenges to fulfilling this commitment.
Participants at the meeting discussed ongoing efforts to develop relevant infrastructure and gas fields to increase still further the gas supplies from Azerbaijan to the European Union. These included: the important Solidarity Ring project; the Bulgaria-Serbia Interconnector, which will further diversify supplies to the integrated European market; and the Trans-Balkan Pipeline project, which will encourage the full utilization of existing transmission systems.
Azerbaijan also took the significant step of joining the Global Methane Pledge initiative, a voluntary commitment by nation-states seeking to reduce global methane emissions by at least 30 percent by the end of the decade. Azerbaijan ratified the UN Framework Convention on Climate Change in 1995 and the Kyoto Protocol in 2000. It has updated its Nationally Determined Contributions (NDC) from a 35 percent to a 40 percent reduction in atmospheric gas emissions and announced the transformation of the Karabakh and Eastern Zangezur economic regions into a “decarbonization zone” with a target of 2050.
With the close of the 10th Ministerial Meeting of the Southern Gas Corridor Advisory Council and the 2nd Ministerial Meeting of the Green Energy Advisory Council in Baku, it is clear that EU–Azerbaijan energy cooperation is irreversibly deepening. The two sides converge in their agreed emphasis on ensuring the stability of the supply of natural gas while pursuing ambitiously the development of nontraditional energy resources. This agreement represents a strategic partnership with a shared vision for the future of energy geoeconomics and signifies a robust foundation for advancing shared interests and mitigating threats to energy security.
Photo: ‘Red and white flag under blue sky during daytime’ by Hikmat Gafarzada. Licensed from Unsplash under Unsplash License.
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