Strategic Partnership: European Union, Azerbaijan energy cooperation
Article by Modern Diplomacy

ECONOMICS  27 June 2024 - 13:35

EU-based Modern Diplomacy has published an article highlighting energy cooperation between the European Union and Azerbaijan. Caliber.Az reprints the article.

Energy is one of the main sectors for the European Union. Since 1951, European integration in the energy sector has been ongoing, marked by the establishment of the European Coal and Steel Community. To meet its energy needs, the EU collaborates with Russia. The EU is Russia’s largest trading partner, accounting for 48 per cent of Russia’s total foreign trade, and 75 per cent of Russia’s foreign investments go to the EU. Russia is one of the main energy producers for EU countries, particularly in natural gas and oil. The low energy prices from Russia have led to the EU’s dependence on Russian energy supplies.

However, with the high demand for energy following the COVID-19 pandemic, energy prices in Europe have increased. As a result, Europe’s natural gas reserves have diminished, a situation further exacerbated by Russia’s invasion of Ukraine in February 2022. Following the invasion, Western countries imposed sanctions on Russia. In response, Russia cut off its natural gas supply to the European Union. This rise in energy prices will have a negative impact on the EU. Since natural gas is the most commonly used energy source by consumers for household needs such as heating, cooking, and cooling, and because it is one of the cleanest-burning fuels, the shortage of natural gas disrupts the EU’s electricity market. Household use accounts for about 22% of total consumption.

The instability in the relationship between the European Union and Russia, coupled with dwindling natural gas reserves, has compelled European leaders to seek alternative energy sources. In facing this new reality, increasing attention is being directed towards reliable and ambitious energy sector countries, such as Azerbaijan. This country not only has abundant energy reserves but has also demonstrated a commitment to becoming a stable energy partner for Europe. Through infrastructure investments and bilateral agreements, Azerbaijan is working to increase its production capacity and export natural gas to the European market, helping to reduce Europe’s dependence on Russia and ensure the sustainability of energy supplies in the future.

On 18 July 2022, the European Union and Azerbaijan signed a Memorandum of Understanding (MoU) on a strategic partnership in the field of energy. This significant agreement includes a commitment to double the capacity of the Southern Gas Corridor pipeline to over 20 billion cubic meters (bcm) per year by 2027, strengthening energy security and diversifying supply sources for the EU. The expanded pipeline capacity will enable the transportation of a larger volume of natural gas from Azerbaijan to various European countries, reducing the continent’s dependence on Russian energy and enhancing its resilience against supply disruptions. This partnership also reflects the EU’s broader strategy to transition towards a more secure and sustainable energy future, integrating renewable energy sources and improving energy efficiency across member states. The MoU encompasses not only infrastructure development but also cooperation in areas such as technology transfer, regulatory alignment, and capacity building, further solidifying the long-term collaboration between the EU and Azerbaijan in the energy sector.

In the shorter term, Azerbaijan is already ramping up its natural gas deliveries to the EU, with expectations to supply 12 billion cubic meters (bcm) in 2022, a significant increase from the

8.1 bcm delivered in 2021. This immediate boost in supply highlights Azerbaijan’s proactive role in addressing Europe’s urgent energy needs amidst a volatile geopolitical landscape.

The Memorandum of Understanding (MoU) also includes crucial support from the EU to help Azerbaijan reduce methane flaring and venting in its gas production processes. This initiative aligns with global environmental standards and is part of the broader aim to support Azerbaijan’s accession to the Global Methane Pledge. By adopting best practices and advanced technologies to minimize methane emissions, Azerbaijan can enhance its environmental stewardship and contribute to global efforts to combat climate change. The EU’s support in this area underscores the commitment to not only secure energy supply but also ensure it is produced in an environmentally responsible manner, thereby reinforcing the sustainable development goals shared by both parties.

Through significant infrastructure investments and strategic bilateral agreements, Azerbaijan is striving to increase its production capacity and export natural gas to the European market. Major projects like the Trans-Anatolian Natural Gas Pipeline (TANAP) and the Trans Adriatic Pipeline (TAP) form the backbone of these efforts, enabling the flow of gas from Azerbaijan to Europe more efficiently and reliably. These pipeline routes are designed to reduce logistical barriers and minimize supply disruption risks, thereby ensuring energy distribution stability.

The fifth meeting of the EU-Azerbaijan Security Dialogue took place on 13 June 2024 in Brussels. During the meeting, delegates engaged in candid discussions regarding the current status of bilateral relations between the EU and Azerbaijan, as well as mutual foreign and security policy matters. The delegates also highlighted Azerbaijan’s role as a dependable energy partner, emphasizing its significance in ensuring energy security and stability for the region.

Furthermore, the meeting agenda also includes an evaluation of the progress of previously agreed projects, such as expanding the capacity of the Southern Gas Corridor pipeline and implementing environmentally friendly technologies in the energy production process. This dialogue reflects the commitment of both parties to continue collaborating towards common goals, namely energy security, sustainability, and carbon emission reduction.

With a strong commitment to energy diversification and sustainable investment, Azerbaijan has successfully established itself as a crucial strategic partner for the European Union. The progressive steps taken by Azerbaijan to expand and ensure a stable and sustainable energy supply will not only strengthen Europe’s energy stability and security but also serve as a key pillar in supporting economic growth in the region. This achievement reflects Azerbaijan’s long-term vision of building a resilient and environmentally friendly energy infrastructure, aligning with the EU’s goals of reducing reliance on conventional energy sources and increasing the use of renewable energy.

Through this close collaboration, both parties will experience significant economic and geopolitical benefits. Azerbaijan, with its abundant energy resources, can meet Europe’s energy needs, while the European Union can provide technological and financial support to further develop Azerbaijan’s energy sector. This synergy will create a mutually beneficial relationship, enhancing regional stability and ensuring a sustainable energy supply for Europe.

This cooperation also opens up opportunities for the development of innovative and green energy projects, which will not only provide economic benefits but also help reduce the global environmental impact. Consequently,  a safer,  more stable,  and  prosperous future can be realized, offering widespread positive impacts for the people in both regions and strengthening their geopolitical positions on the international stage.

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