Azerbaijan and UAE: A billion-dollar partnership in action From energy to tourism

Strengthening the strategic partnership with the United Arab Emirates (UAE) has become a key priority in Azerbaijan’s long-term policy in the Persian Gulf region. This interest is mutual: for several years, UAE business circles have actively pursued joint ventures with Azerbaijan in areas such as green energy, tourism, the gas sector, and infrastructure development. A further step in deepening this business collaboration was the official working visit of Azerbaijan’s President Ilham Aliyev to the UAE.

Over the past decades, the observed geographical diversification of business ties has increasingly encompassed the countries of the Middle East, North Africa, and Africa, with which Azerbaijan’s trade, economic, and investment partnership has grown year by year. In the country’s multi-vector and balanced foreign policy, the Persian Gulf region occupies a special place, where strategic relations are being developed with Saudi Arabia, Qatar, and especially the United Arab Emirates.

Since diplomatic relations between Azerbaijan and the UAE were established in 1992, political and business cooperation between the two states has been built on a solid foundation of mutual respect and shared approaches on key issues of the global and regional political agenda. This partnership is also manifested in multilateral platforms such as the UN, the Non-Aligned Movement, and the Organisation of Islamic Cooperation. Political, business, and humanitarian relations between the countries are governed by an extensive legal framework: in total, more than 50 bilateral documents have been signed, covering intergovernmental, economic, energy, humanitarian, and cultural spheres.

The sustainability and dynamism of Azerbaijan–UAE bilateral ties are further reinforced by the friendly relationship between the leaders of the two countries, who have consistently conducted mutual visits and held productive, wide-ranging meetings. A key outcome of these interactions was the signing of a Memorandum of Understanding on Strategic Partnership in January 2024, followed by the entry into force of the Joint Declaration on Comprehensive Strategic Partnership in September 2025.

Another high-level meeting took place on February 2, 2026, in Abu Dhabi, during which Azerbaijan’s President Ilham Aliyev held productive talks with UAE President Sheikh Mohamed bin Zayed Al Nahyan. The leaders noted that Azerbaijan–UAE relations are firmly rooted in strategic partnership and expressed satisfaction with the steady expansion of cooperation across political, economic, energy (including renewable energy), cultural, humanitarian, and other spheres.

The discussions also highlighted the significance of the joint operational-tactical exercises “Peace Shield – 2026,” conducted in Abu Dhabi by the armed forces of Azerbaijan and the UAE. Both sides expressed confidence that these exercises would strengthen operational military interoperability and emphasised the importance of continuing such exercises in the future.

The heads of state exchanged views on the prospects for bilateral relations and future contacts, including discussions on the current and upcoming business agenda. A key outcome of the meeting was the signing of several important agreements in the presence of the Presidents of Azerbaijan and the UAE. Notably, a contract was concluded for the sale of a non-controlling stake in JSC “Southern Gas Corridor” (SGC)—owned by the Azerbaijani Ministry of Economy—to XRG, an investment subsidiary of the Abu Dhabi National Oil Company. During the visit, a letter of intent was also signed regarding a cooperation agreement in the defence sector between the two countries’ Ministries of Defence.

Both presidents expressed confidence that these agreements would provide a fresh impetus to the development of Azerbaijan–UAE ties. The momentum of business partnership between the two countries is expected to remain strong, particularly following the signing of the Intergovernmental Agreement on Comprehensive Economic Partnership (CEP) in July last year. The CEP aims to deepen economic cooperation, liberalise and simplify trade, and promote joint initiatives in sectors such as industry, green energy, agriculture, finance, logistics, tourism, and construction. It also seeks to strengthen supply chains through increased mutual investment and a significant expansion of entrepreneurial activity.

In particular, it is worth recalling the observed growth in investment dynamics between the two countries in recent years: from 1995 to 2024, the UAE invested $3.4 billion in Azerbaijan’s economy, while Azerbaijan’s reciprocal investments in the Emirates amounted to $1.1 billion, reflecting significant mutual business interest and the strength of economic ties between the two countries.

Of particular note is the implementation of numerous joint projects in the field of renewable energy (RE). As a result of the partnership with the leading UAE company Masdar, the 230 MW Garadagh Solar Power Plant (SPP) was commissioned in Azerbaijan in October 2023, designed to generate 500 million kilowatt-hours of electricity annually. In turn, in June of last year, Masdar laid the foundation for three renewable energy generating facilities with an investment value of around $1 billion and a total capacity of one thousand megawatts: 315 MW in the village of Banka, Neftchala; 445 MW in Bilasuvar; and 240 MW in Absheron-Garadagh.

The joint portfolio of Masdar and SOCAR also includes potential projects in offshore wind energy with a total capacity of two gigawatts, and future initiatives may cover the production of green hydrogen and ammonia, as well as synthetic methane. Masdar is also cooperating with JSC “Azerbaijan Railways” (ADY) in the decarbonisation of rolling stock and freight logistics assets.

Energy remains the cornerstone of the partnership between Azerbaijan and the UAE, and strong ties have been established between Azerbaijan’s State Oil Company (SOCAR) and the Abu Dhabi National Oil Company (ADNOC) in the oil and gas sector. In 2023, a contract was signed between SOCAR, TotalEnergies, and ADNOC for the sale to ADNOC of a 30% stake in the Azerbaijani Absheron gas-condensate field. Agreements were also signed between SOCAR and ADNOC on the mutual exchange of stakes in the SARB and Umm Lulu fields. Now, with XRG becoming a co-owner of a part of the stake in the Southern Gas Corridor (SGC) project, this demonstrates mutual trust and the presence of a favourable investment climate in Azerbaijan.

However, the renewable energy and oil-and-gas sectors are far from the only areas attracting investment from the UAE. Notably, a joint investment fund established by Azerbaijan Investment Holding and the Abu Dhabi Development Holding Company, with a financial capacity of $1 billion, provides opportunities to co-finance a range of priority projects in non-oil sectors.

During the 1st Azerbaijan International Investment Forum in Baku in September 2025, a cooperation agreement was signed with the UAE company Modon Holding for an urban development project valued at $5 billion. The initiative aims to create a modern coastal zone around Lake Boyukshor, incorporating facilities for healthcare, commerce, education, hospitality, and other key sectors.

Notably, the tourism and hospitality sector is also a priority area for cooperation between Azerbaijan and the UAE, supported by the increase in direct flights between Baku and Abu Dhabi, Dubai, and Sharjah, as well as by the simplification and digitalisation of visa procedures. Currently, the number of weekly direct flights for UAE national carriers has reached approximately 28, while Azerbaijani airlines operate 14 flights per week.

A particularly notable indicator was 2024, when nearly 49,000 tourists from the UAE visited Azerbaijan, while the number of Azerbaijani travellers to the Emirates exceeded 115,000.