Azerbaijan, Romania expanding cooperation in all areas from politics to business

The Southern European countries traditionally cooperate with Azerbaijan in energy supplies.

Moreover, Azerbaijan has been reliably ensuring the energy security of Europe, Asia and Africa by increasing gas supplies along the Southern Gas Corridor (SGC) during four years.

Romania holds a special place among Azerbaijan’s partners in the Balkans, business ties with which have recently turned into strategic cooperation.

New vectors of bilateral relations were discussed during Romanian Energy Minister Sebastian-Ioan Burduja’s recent visit to Baku and the eighth meeting of the Azerbaijani-Romanian joint intergovernmental commission on trade, economic relations, scientific and technical cooperation organised on the same day.

Baku and Bucharest celebrated the thirtieth anniversary of the establishment of diplomatic relations in 2022. It is very symbolic that these relations are based on a high level of complementarity between the elites and friendly relations between the two peoples, common views on the current challenges, respect for mutual interests, including the primacy of the principles of sovereignty and territorial integrity.

The past years have turned out to be very fruitful for the two countries in terms of creating a sustainable business atmosphere for the implementation of long-term initiatives.

“There is a strategic partnership between Azerbaijan and Romania, and cooperation is expanding across all areas,” Azerbaijani President Ilham Aliyev said while receiving the Romanian energy minister.

The President of Azerbaijan stressed the importance of reciprocal visits between heads of state and at other levels to enhance bilateral ties.

Touching upon the importance of the 8th meeting of the Joint Commission on economic-trade relations and scientific-technical cooperation between the Government of the Republic of Azerbaijan and the Government of Romania in Baku in terms of defining the prospects for bilateral bonds, President Ilham Aliyev hailed the inclusion of energy and other pertinent issues in the meeting's agenda.

The sides underscored significant advancements in the energy sector and shared opinions on natural gas exports from Azerbaijan and the export of green energy to Romania via the Black Sea. They acknowledged ongoing discussions surrounding LNG, green energy and gas supply projects, with Azerbaijan aiming for a structured entry into the Romanian energy market.

The foundation of mutually beneficial Azerbaijan-Romania trade and economic relations is based on energy and transport, while recently on the implementation of promising initiatives in electricity transit. The cooperation in agriculture, healthcare and education has greatly expanded over the past years.

“Over 60 interstate and intergovernmental documents on cooperation have been signed between the countries. The Joint Declaration on Strategic Partnership has been in force since 2009 while the Joint Action Plan for the Implementation of the Strategic Partnership since 2011,” co-chairman of the commission from the Azerbaijani side, Minister of Labour and Social Protection of the Population Sahil Babayev said.

In general, over the past decade, trade between Azerbaijan and Romania has increased 2.5 times. Trade turnover between the countries increased by almost 30 per cent - to $670 million in 2023. The cooperation in the investment sphere has also intensified.

The State Oil Company of the Azerbaijan Republic (SOCAR), which holds a significant position in the fuel market of Romania, is actively operating in the Romanian market. In particular, Azerbaijani investments in Romania exceed $90 million. In turn, Romanian companies have invested $30 million in the Azerbaijani economy.

Most Azerbaijani investments in the Romanian economy account for the energy sector, and most of the capitalisation is based on SOCAR’s investments, which owns 70 retail filling stations and three fuel depots. In turn, a certain amount of Azerbaijani capital is used in logistics, port infrastructure, oil refining, and real estate in Romania.

“Baku and Bucharest have a strategic partnership, and there are many opportunities for developing further successful cooperation. In particular, the aspects of cooperation in the priority energy sector, as well as in transport, investment, agricultural, social, educational, humanitarian, infrastructure, construction and other spheres will be considered during the meeting of the intergovernmental commission and other meetings in Baku,” Romanian Energy Minister Sebastian-Ioan Burduja said.

Nevertheless, it is obvious that the energy sector will remain a key sphere of the Azerbaijani-Romanian business cooperation for the foreseeable future. A contract for the supply of Azerbaijani gas to Romania was signed during the ninth ministerial meeting of the Advisory Council on the Southern Gas Corridor (SGC) in Baku in early February 2023.

According to the Azerbaijani State Statistics Committee, 184.29 million cubic metres of gas worth $171.25 million were exported to the Romanian market in 2023. Taking into account the completion of the construction of interconnectors in the Balkan region, the Azerbaijani gas supplies are planned to be increased to one billion cubic metres.

“Today Azerbaijan is focusing not only on trade in pipeline gas, but also on the possibility of supplying liquefied natural gas (LNG). Azerbaijan is working with partner countries to ensure access to gas supply routes to Europe,” Deputy Minister of Energy Kamal Abbasov noted during the meeting of the intergovernmental commission.

The prospects of the gas vector in bilateral trade were also confirmed by Romanian Energy Minister Sebastian-Ioan Burduja.

“SOCAR is one of the main players in the Romanian natural gas market, and we discussed aspects of increasing supplies. Other energy sectors, including a project for supplying liquefied natural gas from SOCAR’s Kulevi terminal to the Port of Constanta, were also considered. Moreover, LNG can be produced at the SOCAR terminal in the Georgian port of Kulevi and, in liquefied form, may be supplied to the Romanian port of Constanta by ships,” Sebastian-Ioan Burduja said.

He noted that today the prospects for the construction of an LNG regasification terminal in the port of Constanta for further transfer of gas to the Romanian gas pipeline system are being considered.

Among the most important joint projects, the Romanian energy minister mentioned the laying of the Black Sea Energy offshore power cable to supply “green” energy from future wind power plants in the Caspian Sea.

The strategic partnership agreement for the Black Sea Energy project was signed by Azerbaijan, Georgia, Romania and Hungary on December 17, 2022. Bulgaria joined the project in early 2023. Serbia expressed its readiness in November to connect its energy system to the Romanian and Hungarian power distribution networks as soon as possible.

The project, with an initial budget of $2.3 billion, is expected to be prepared by 2029. An energy line stretching 1,195 km and a capacity of 1,000 MW is intended to supply electricity generated in the renewable energy sector from Azerbaijan to Europe. In particular, the European Commission (EC) is expected to become one of the sponsors of the laying of a high-voltage submarine cable, which will become one of the longest in the world.

Besides the energy sector, Azerbaijan and Romania plan to expand cooperation in transport, tourism, and investment processes. In particular, the two countries are gradually overcoming the consequences of the COVID-19 pandemic recession by improving cooperation in the recreational sector. The number of Romanian tourists visiting Azerbaijan increased by 29 per cent in the first months of this year.

The implementation of the “Black Sea - Caspian Sea” promising transport route, where Tbilisi and Ashgabat are partners of Baku and Bucharest, seems to be a very promising direction.

Azerbaijani Deputy Minister of Digital Development and Transport Samir Mammadov also reminded the attractiveness of the Caspian-Black Sea transit initiatives within the Middle Corridor during the meeting of the intergovernmental commission.

“Modern geopolitical realities increase the strategic importance of the Middle Corridor for cargo transportation between Asia and Europe. Together with partner countries we are making efforts to expand this corridor, and we are also working to overcome bottlenecks here,” he said.

Apparently, this trend is in demand in Romania. Sebastian-Ioan Burduja said that Azerbaijan an important “bridge” between the Caspian and Black Seas to transport goods from Asia to Europe.

“The development of the Trans-Caspian International Transport Route is very important in the current difficult realities in the transportation of goods from Asia to Europe and back. There is a problem with the Suez Canal, and therefore the role of alternative corridors is growing,” Burduja emphasised.

The participation of Romanian investors in the Alat Free Economic Zone may be another vector of cooperation in the future.

“The Azerbaijani government invites Romanian investors to work in the Alat Free Economic Zone, which will become the most profitable area for business. We are ready to evaluate any Romanian proposal and will give preference to investors who will use innovative technologies and approaches and who will be engaged in high-value-added, export-oriented production,” another participant of the intergovernmental commission, Chairman of the Board of Alat Free Economic Zone Valeh Alasgarov said.

Azerbaijani Deputy Economy Minister Sahib Mammadov has also urged the Romanian investors to participate in the Azerbaijani industrial clusters, including the projects which are being implemented in the Azerbaijani territories liberated from occupation.

He also noted that statistical indicators of trade turnover do not reflect the full potential of bilateral cooperation between Azerbaijan and Romania and called on the sides to encourage and support initiatives that will serve the development of mutually beneficial business partnerships.