Azerbaijan – Serbia: A partnership without pauses Analysis by Khazar Akhundov

In recent years, Azerbaijan has taken a series of steps to diversify its trade and economic ties with countries in Eastern and Southern Europe, expanding the geography of its non-oil exports alongside its energy sector. In this regard, the business relationship with Serbia looks particularly promising: at the core of this partnership is the export of Azerbaijani gas via the Southern Gas Corridor (SGC).

However, the official visit of Azerbaijani President Ilham Aliyev to Serbia on February 15–16 this year confirmed the emergence of qualitatively new directions in the bilateral business agenda. Among other initiatives, Baku and Belgrade plan, on a parity basis, to build a 500 MW gas-fired power plant on Serbian territory, tentatively by 2029.

For more than a decade, Serbia has been one of Azerbaijan’s important political and economic partners in the Southeast European region. The exceptionally close nature of bilateral relations has been formally enshrined in the 2013 Declaration on Strategic Partnership, the 2018 Joint Action Plan, and the 2022 Memorandum on the Establishment of the Strategic Partnership Council.

The strong political will and personal friendship between Presidents Ilham Aliyev and Aleksandar Vučić provide a solid foundation for Azerbaijani–Serbian relations. Their mutual visits in recent years, as well as meetings at international events, vividly demonstrate the depth of strategic dialogue between the two countries.

“Serbia and Azerbaijan are two friendly countries that always stand by each other. Taking this opportunity, I would like to congratulate you and all the friendly people of Serbia on the occasion of Statehood Day,” Azerbaijani President Ilham Aliyev said on February 15 while speaking in Belgrade during a joint press statement with Serbian President Aleksandar Vučić.

“Indeed, many issues were discussed at the first meeting of the Serbia-Azerbaijan Strategic Council today.”

The Azerbaijani president also emphasised that the two countries have clear plans for the future: they intend to strengthen relations in the economic and energy sectors, implement joint investment projects, explore new opportunities in energy and transport, and ultimately build even stronger synergy between them.

Serbian President Aleksandar Vučić shares a similar view regarding the wide potential for developing business cooperation and diversifying partnership in non-oil sectors of the economy.

“Dear President Aliyev, my dear friend, thank you for this visit [...] Our Chinese friends say that when it rains like this, it is always a good sign that something big is about to begin. I do hope that, despite the unfavorable weather, we will view this event in the best possible way for ourselves and see what a bright future lies ahead for both Serbia and Azerbaijan,” Vučić said, noting that, compared with 2012, bilateral trade in the services sector has grown 16 times.

Notably, the total trade turnover between Azerbaijan and Serbia reached $135 million in 2025, with imports of Serbian products (mostly non-oil) into Azerbaijan rising by 55% last year. Azerbaijani exports, primarily composed of hydrocarbon resources, continue to form the backbone of bilateral trade.

Following the commissioning in December 2023 of the 170-kilometre Niš–Dimitrovgrad Interconnector (Bulgaria–Serbia Gas Pipeline, IBS), which linked the gas transport systems of Bulgaria and Serbia, a key topic on the Azerbaijan–Serbia business agenda has been the gas supplies via the Southern Gas Corridor (SGC), operational since January 2024. According to an intergovernmental agreement, Serbia receives up to 400 million cubic metres of natural gas from Azerbaijan.

“Some time ago, we started exporting natural gas to Serbia, and today we decided to increase the volume of our exports,” Azerbaijani President Ilham Aliyev said during a meeting in Belgrade. “Now Serbia will also convert the gas to be exported into electricity, thereby acquiring clean electricity. This will create opportunities for both the Serbian market and for future exports.”

On September 26, 2024, a contract was signed between State Oil Company of Azerbaijan (SOCAR) and its partner, the Serbian gas operator Srbijagas, providing for the supply of an additional volume of Azerbaijani gas to Serbia. At the same time, Azerbaijan plans to gradually increase its gas deliveries to the Balkan country to 1 billion cubic metres per year.

As recently noted by Orkhan Zeynalov, Deputy Minister of Energy of Azerbaijan, SOCAR colleagues are currently engaged in intensive negotiations with their partners in Belgrade, and an agreement on the specific project is ready to be signed.

Notably, in the medium term, Baku and Belgrade plan to cooperate on new energy initiatives, such as the Black Sea Energy project, which envisions the supply of green energy from Azerbaijan via an undersea power cable across the Black Sea. In this context, President Ilham Aliyev noted that by 2032 Azerbaijan will increase the capacity of its power system by an additional 8 GW, with the majority of electricity intended for export: “To achieve this, we need new and larger transmission capacities because our main export destination is Europe.”

The joint work of SOCAR, the Serbian energy operator EPS, and Srbijagas on the construction of a 500 MW combined-cycle gas power plant also appears highly promising, elevating the energy partnership between the two countries to a qualitatively new level.

“ Today, the Serbian gas company and SOCAR held talks on this issue and a cooperation agreement was signed. We will try to resolve each issue within two or three months, so that the project documentation can be prepared and construction can begin immediately after that. The construction will take more than two years,” Serbian President Aleksandar Vučić said.

“Three sites have been selected around the city of Nis. We are talking about clean energy. The European Union also recognizes this. In short, the construction is expected to take place in Tripale, Krusti, or Niška Banja. However, I think Krusti is the most suitable place.”

The Serbian president emphasised that both countries will participate in financing this project on a parity basis, with Serbian companies joining the effort, and the completion of the gas-fired power plant is scheduled for 2029.

Notably, energy is far from the only area where Baku and Belgrade plan to actively cooperate in the future. To diversify collaboration in transport, agriculture, industry, and other non-oil sectors, 57 intergovernmental and interstate agreements have already been signed between the two countries, with 13 more under consideration and expected to be concluded soon.

During the official events in Belgrade attended by the presidents of both countries, two intergovernmental agreements were signed: one on food security and another on the design, construction, and management of a gas-turbine power plant in Serbia. Additionally, memorandums of understanding were signed between the ministries of economy of the two countries and several other agencies, covering areas such as media and information, healthcare, culture, youth and sports, among others.

An important area of cooperation is the development of the B2B format and the strengthening of ties between small and medium-sized enterprises (SMEs) in both countries. In October last year, a roadmap was signed in Belgrade to develop this track. Currently, nine Serbian companies operate in Azerbaijan in the fields of trade and services, agriculture, and infrastructure, while leading Azerbaijani construction companies, such as AzVirt, are successfully implementing major highway projects in Serbia.

During the meeting in Belgrade, the Serbian president confirmed participation in an investment forum to be held in Azerbaijan in September, while next year Azerbaijan will take part in EXPO 2027 in Belgrade. Finally, the two friendly states plan to expand cooperation in the recreational sector, supported by the planned launch of a direct Air Serbia flight between Belgrade and Baku on May 3.