Azerbaijan’s contribution to the Balkan energy security
Regaining momentum

ANALYTICS  16 November 2023 - 14:26

On November 14, 2023, Azerbaijan and Serbia signed an agreement enabling Belgrade to import up to 400 million cubic meters (mcm) of natural gas from Azerbaijan by the end of 2024. The contract was signed by Serbian energy minister Dubravka Djedovic Handanovic and Azerbaijan’s Energy Minister Parviz Shahbazov.

In addition, the Serbian minister also signed a memorandum of understanding (MoU) with Azerbaijan's energy ministry, under which Serbia will import up to 400 mcm of natural gas per year until the end of 2026 and one billion cubic meters of gas per year after 2026.

According to the Serbian media, Serbia consumed three billion cubic meters of natural gas in 2022, of which Russia's Gazprom supplied the majority. However, the Balkan country is finishing an interconnector with Bulgaria that will enable import diversification and allow buying of pipeline gas from other countries, including Azerbaijan, or liquified natural gas (LNG).

Indeed, the cooperation with Azerbaijan represents the strategic goal of diversifying supplies and further strengthens Serbia’s position as a transit country for gas supply to Central European countries.

In recent years, official visits between Azerbaijan and the countries in the region have been steadily intensifying. Azerbaijan has managed to establish balanced and rapidly developing relations with each country in the region.

The expansion of relations between Azerbaijan and the Balkan countries has been influenced not only by traditional factors but also by increasing regional tensions, especially Russia's ongoing war against Ukraine and the recent disputes between Albania and Azerbaijan with Iran.

Azerbaijan is trying to turn this situation into an opportunity by taking advantage of the current conjuncture. In this context, the ongoing war has opened a new door for Azerbaijan in terms of energy. The Balkans is a corridor for the delivery of Azerbaijani gas to Europe.

Hence, an opportunity arises to minimize energy security vulnerabilities in the Balkans. Azerbaijan built relations with an array of Balkan states in addition to Serbia, including Bulgaria, Albania, Bosnia and Croatia.

Similar to Serbia, other states' willingness to build closer ties to Azerbaijan is linked to energy security concerns. For example, Bulgaria, which is highly dependent on Russia in terms of energy, has started to supply gas from Azerbaijan due to its agreement with Azerbaijan at the end of 2022.

Azerbaijani gas began to reach Bulgaria through the Greece-Bulgaria Pipeline, steadily facilitating the country's dependence on Russia. In addition, North Macedonia has expressed interest in importing gas from Azerbaijani; however, this largely depends on the completion of the Greece–North Macedonia interconnector.

With the expansion of multilateral ties, President Ilham Aliyev’s recent visits to Albania, Bosnia & Herzegovina, Bulgaria and Serbia — with which Baku has established individual partnerships — fit into a broader framework, with Azerbaijan increasingly pivoting toward the Balkans.

Despite Azerbaijan’s increasing exports and its natural gas reserves, it is not able to fully substitute for Russia at the pan-European level in terms of gas supply. However, it can play a crucial role in promoting the energy security of individual states, both in the European Union and the EU's immediate neighbourhood, by reducing their dependence on Russian gas.

Baku plans to pump additional gas volumes to Europe after extracting the first gas from the Absheron gas field, which will be a key step in increasing gas production in Azerbaijan. According to estimates, the gas field possesses around 350 billion cubic meters (bcm) of natural gas and 45 million tonnes of gas condensate. Various forecasting models indicate that gas production in Azerbaijan will be about 49.2 bcm in 2024 and 49.7 bcm in 2025.

This also benefits the European Union (EU), which plays the role of a stabilizer in the region. Indeed, Azerbaijan's increasing presence in the region benefits the EU in terms of energy and contributes to the stability in the region. Azerbaijan’s confident energy march in the world markets has also attracted the attention of the world community.

Thus, amid the current geopolitical developments in Eurasia, Azerbaijan has a historic chance to extend its influence in the Caucasus and Caspian Sea region both eastward (Central Asia) and westward (Balkans). Increased energy supply to Europe and further development of critical connectivity projects will only serve to elevate Baku’s aspirations and opportunities.

Caliber.Az