Baku–Abu Dhabi: building a partnership on trust Green energy and beyond

Over the past decade, Azerbaijan has made significant strides in diversifying its exports and attracting foreign investment, particularly through closer cooperation with the countries of the Persian Gulf. Among these, the United Arab Emirates (UAE) has emerged as a key partner. Emirati businesses have been especially active in joint ventures spanning green energy, tourism, and infrastructure. This growing economic partnership was further reinforced by President Ilham Aliyev’s recent visit to the UAE, at the invitation of UAE President Sheikh Mohamed bin Zayed Al Nahyan.

The United Arab Emirates was among the first countries to recognise Azerbaijan’s independence on December 26, 1991. Since then, relations between Baku and Abu Dhabi have been built on a strong foundation of mutual respect and shared perspectives on key global and regional issues. The two friendly states have cooperated successfully on the international stage, including at the United Nations, within the Non-Aligned Movement, and through the Organisation of Islamic Cooperation.

The stability and dynamism of bilateral relations are also rooted in the genuine friendship between the leaders of the two countries. To date, President Ilham Aliyev has visited the UAE six times, while the UAE President has made three visits to Azerbaijan. These meetings have proven highly productive: in January 2024, a Memorandum of Understanding on Strategic Partnership was signed, followed by the Joint Declaration on Comprehensive Strategic Partnership in September 2025.

Overall, more than 50 bilateral agreements have been signed between the two countries, covering political, economic, energy, humanitarian, and cultural cooperation.

Notably, the most recent meeting between the leaders of the two friendly states took place on December 17 in Abu Dhabi, where they attended the opening ceremony of the annual global sports tournament, Games of the Future 2025. This event is held in two stages—traditional physical sports competitions and assessments of participants’ skills in digital games. Under the motto “Next Generation People. Play Your Future,” athletes from around the world compete across 11 sports disciplines.

President Aliyev’s current visit to the UAE is expected to further accelerate the implementation of the Comprehensive Economic Partnership Agreement signed on July 9, 2025. During their discussions, the two heads of state emphasised the successful development of bilateral relations grounded in a strategic partnership across all sectors, including economic and energy cooperation—particularly in renewable energy—as well as cultural and humanitarian collaboration. They also explored promising avenues for future joint initiatives.

In recent years, business circles in both countries have actively engaged in trade forums, specialised exhibitions, conferences, and high-level joint meetings, using these platforms to strengthen trade, economic, and investment ties. Azerbaijan’s Ministry of Economy, together with its Export and Investment Promotion Agency (AZPROMO), has worked intensively to promote domestic agricultural and industrial exports. Through trade missions, promotional campaigns, and targeted marketing, Azerbaijani food and other products are now actively sold in UAE retail networks under the unified Made in Azerbaijan brand.

These efforts have contributed to rapid growth in bilateral trade. From January to October of this year, trade turnover between the two countries rose by more than 80%, reaching $147.49 million. When transit and re-export volumes are taken into account, the scale of joint commercial initiatives is even larger: transit shipments between the two countries increased by over 20% this year.

Tourism ties between Azerbaijan and the UAE have grown significantly, supported by an increase in direct flights connecting Baku with Abu Dhabi, Dubai, and Sharjah, as well as the simplification and digitalisation of visa procedures. Currently, UAE national carriers operate approximately 28 direct flights per week to Azerbaijan, while Azerbaijani airlines offer about 14 flights weekly. The year 2024 was particularly notable: nearly 49,000 tourists from the UAE visited Azerbaijan, while more than 115,000 Azerbaijani travellers visited the Emirates.

Investment cooperation remains a key pillar of the bilateral agenda. Azerbaijan is home to over 420 companies with UAE capital, operating across sectors such as industry, agriculture and processing, transport, construction, trade, and services. Throughout the history of their relations, Azerbaijani businesses have invested around $1 billion in the UAE economy, while UAE investments in Azerbaijan total approximately $3.3 billion.

The recent surge in investment between Azerbaijan and the UAE is closely linked to the implementation of numerous joint projects in renewable energy (RE). Energy remains a cornerstone of the Azerbaijan–UAE partnership, with strong ties already established between SOCAR (State Oil Company of Azerbaijan) and ADNOC (Abu Dhabi National Oil Company) in the oil and gas sector.

Equally notable has been their cooperation in green energy. Through a partnership with leading UAE company Masdar, the Garadagh 230 MW solar power plant (SPP) was commissioned in Azerbaijan in October 2023. This plant is expected to generate 500 million kWh annually, reducing CO₂ emissions by more than 200,000 tonnes.

In June 2024, Masdar initiated three additional renewable energy projects with a total investment of around $1 billion and a combined capacity of 1,000 MW: 315 MW in Banka (Neftchala), 445 MW in Bilasuvar, and 240 MW in Absheron–Garadagh. These facilities are projected to produce over 2.3 billion kWh of electricity annually, saving 496 million cubic meters of natural gas each year and preventing more than 943,000 tonnes of CO₂ emissions.

The joint Masdar–SOCAR portfolio also includes potential offshore wind projects with a total capacity of 2 GW and may expand in the future to green hydrogen, ammonia, and synthetic methane production. Additionally, Masdar is collaborating with Azerbaijan Railways (ADY JSC) on decarbonising rolling stock and freight logistics.

The renewable energy sector is by no means the only area attracting investment. A joint investment fund, established by Azerbaijan Investment Holding and the Abu Dhabi Development Holding Company, is creating opportunities to co-finance a number of priority projects in the non-oil sector.

“The joint investment fund, with financial resources of $1 billion, is one of the most important business instruments, and negotiations are currently underway to invest in several projects under the Fund,” said Azerbaijan’s Minister of Economy, Mikayil Jabbarov, at a recent reception in Baku celebrating UAE National Day.

The minister also highlighted that during the 1st Azerbaijan International Investment Forum held in Baku in September, a cooperation agreement was signed with UAE company Modon Holding on a $5 billion investment project in urban development. The initiative aims to create a modern coastal zone around Lake Boyukshor, featuring healthcare, commercial, educational, and hospitality facilities.