Azerbaijan-Italy cooperation expands beyond hydrocarbons From TAP to renewables

Over the past two decades, Italy has consistently ranked as Azerbaijan’s top European trading partner. This strong economic dynamic has been largely driven by Azerbaijani oil and gas exports, which expanded significantly following the commissioning of the Trans-Adriatic Pipeline (TAP). Energy is likely to remain the long-term cornerstone of bilateral business relations.

However, the outcomes of the recently held 6th session of the Azerbaijan–Italy Intergovernmental Commission (IGC) on economic cooperation in Baku indicate that both countries intend to broaden investment opportunities, engage in initiatives along the Middle Corridor, and develop projects in green energy.

Italy has traditionally served as a key energy hub for Azerbaijani oil exports: a significant portion of Azerbaijani oil arriving at the Turkish Mediterranean port of Ceyhan is shipped through terminals in the Italian ports of Trieste and Augusta. Overall, Italy has held the top position for oil imports from Azerbaijan for many years. According to the State Customs Committee of Azerbaijan (SCCA), between January and November 2025, nearly 12.671 million tonnes of Azerbaijani oil were exported to Italy, representing a 28.5% increase compared to the same period in 2024.

Meanwhile, for the fifth consecutive year, Azerbaijani natural gas from the offshore Shah Deniz gas-condensate field has been delivered to Italy under the Southern Gas Corridor (SGC) project via the Trans-Adriatic Pipeline (TAP). “To date, TAP has supplied 54.3 billion cubic meters of Azerbaijani gas to Europe, including 45.4 billion cubic meters delivered to Italy,” stated Azerbaijan’s Energy Minister Parviz Shahbazov at the 6th session of the Azerbaijan-Italy Intergovernmental Commission. “Cooperation within the Southern Gas Corridor contributes to the energy security of both Europe and Italy.”

In other words, roughly 80% of Azerbaijani gas supplied to Europe via TAP goes to Italy, and these deliveries have become an important factor in strengthening Azerbaijan-Italy business cooperation. Given the positive results achieved so far, the Italian government is showing interest in potentially expanding the Southern Gas Corridor based on market assessments and with active participation from international financial institutions.

Overall, the oil and gas sector continues to form the backbone of bilateral trade. According to the State Customs Committee, between January and November 2025, trade turnover between Azerbaijan and Italy reached nearly $11.243 billion, up 9% compared to the same period in 2024. Notably, the vast majority of this trade consisted of Azerbaijani energy exports—over $10.803 billion, growing by 9.8%. In contrast, Italian imports continued to decline during this period, falling 7.1% to $439.468 million.

This trade imbalance is encouraging Italian businesses to expand their presence in the Azerbaijani market and, alongside commercial initiatives, increase their participation in investment projects. The 6th session of the Azerbaijan-Italy Intergovernmental Commission, held for the first time after a six-year gap, focused on exploring new opportunities to diversify bilateral economic cooperation.

“To date, Italian investments in Azerbaijan have amounted to $805 million, while Azerbaijani investments in Italy have reached $342 million, and there is clearly significant potential to expand these figures,” Energy Minister Parviz Shahbazov said during the IGC session. “Signing an agreement on the promotion and reciprocal protection of investments is one of the key tasks we face to ensure growth in these indicators.”

Notably, the strategic partnership between Baku and Rome in the energy sector is not limited to traditional hydrocarbon supplies: a promising new trend is emerging in the field of renewable energy, where joint efforts are already being explored. According to Energy Minister Parviz Shahbazov, initiatives to create a regional “green” energy corridor linking Azerbaijan with Central Asia, Türkiye, and Europe are opening new opportunities for diversifying Azerbaijan-Italy business relations.

“Italian company CESI SpA has been selected as the advisory partner for preparing the feasibility studies of the Caspian-Black Sea-Europe and Central Asia-Azerbaijan green energy corridor projects,” Shahbazov said. This includes a project launched in December 2022 involving Azerbaijan, Georgia, Romania, and Hungary, which envisages laying a 1,195 km Black Sea Energy electricity cable on the seabed with a capacity of 1,000 MW. Implementation of the project, with an initial budget of $2.3 billion, is expected to begin around 2029.

An important area for Azerbaijan-Italy cooperation in renewables is seen in the Karabakh and East Zangezur economic regions, which have been designated as “green energy zones.” Their solar and wind energy potential exceeds 10 GW, and large-scale projects are already underway.

“Italian companies are actively involved in energy projects in Azerbaijan’s territories liberated from occupation,” Minister Parviz Shahbazov noted during the IGC session. “In particular, Italian company Ansaldo Energia is playing a key role in building substations and restoring energy infrastructure in these liberated areas. We believe that Azerbaijan’s transition to green energy will take our cooperation with Italy to a new level: we will not only be a supplier of traditional energy resources but also a key partner in developing the energy of the future.”

Italy invests significant resources in the development of its national green energy sector and is among the world’s leading operators in this field. As highlighted during the IGC discussions, this expertise can make a substantial contribution to Azerbaijan’s strategy for diversifying its energy sector, helping reduce dependence on fossil fuels.

Investment cooperation between the two countries can also be expanded through reverse flows. In particular, the State Oil Fund of Azerbaijan (SOFAZ) is growing its assets through investments in Italian renewable energy projects. In June of last year, SOFAZ signed an agreement with leading Italian renewable energy company Enfinity Global, acquiring a 49% stake in a portfolio of solar photovoltaic (PV) power plants with a total capacity of 402 MW. Italy welcomes the Oil Fund’s investment interest in green energy and is ready to expand opportunities for entry into the local market.

Participants at the IGC also discussed highly promising investment and business opportunities related to transport and logistics infrastructure, particularly within the framework of the Middle Corridor projects and the development of new infrastructure in Azerbaijan. “Italy can become a European logistics hub through the implementation of the Middle Corridor project,” emphasised Azerbaijan’s Energy Minister.

According to the co-chair of the IGC, Italy’s Deputy Minister of Foreign Affairs and International Cooperation Edmondo Cirielli, the South Caucasus and Central Asia are becoming key regions for transport routes between Europe and Asia. “Italian companies have already expressed interest in participating in these projects, particularly in the railway sector, and the IGC will serve as a platform to confirm Italy’s readiness to support Azerbaijan in implementing projects related to the Middle Corridor,” he noted.

At the same time, Italian companies are prepared to contribute to the development of the processing industry, agriculture, manufacturing, transport and logistics, the IT sector, healthcare, and pharmaceuticals, as well as support Azerbaijan’s state programs aimed at improving waste management efficiency. This commitment was indirectly confirmed by the protocol signed in Baku at the 6th IGC session, as well as the Joint Action Plan for 2026–2027, which envisages the implementation of 65 initiatives across 18 areas of cooperation.