New quadrilateral energy deal as another milestone for EU’s energy security A new transmission route is underway

On December 17, the leaders of Azerbaijan, Georgia, Hungary, and Romania gathered together in Bucharest to sign another strategically important contract that will facilitate interregional cooperation and strengthens Azerbaijan’s role as a stable transit hub and energy exporter. Hence, President Ilham Aliyev signed a deal on an underwater electric cable under the Black Sea to deliver green Azeri energy to Europe. The agreement involves a 1,100 km-long electric cable of 1,000 MW under the Black Sea, from Azerbaijan to Romania, as part of wider European Union efforts to diversify energy resources away from Russia amid the Ukraine war.

The occurrence of such an agreement should not come as a surprise given the broad implications of the Ukraine war, particularly the energy deficit and economic recession. In this regard, the new cooperation format will enhance our energy resilience and ensure diversification of supply and transport routes. More importantly, the current deal is market-driven, given the increased energy demand in Europe. European gas storage currently stands at 93.4% utilization, significantly above the 88.9% five-year historical average for the time of year, offering an important buffer against potential unplanned supply outages or surges in demand.

Indeed, the project is of greater importance for the European Union amid the growing energy crisis, and therefore Brussels seemed more enthusiastic about fulfilling the agreement as soon as possible. Hence, European Commission President Ursula von der Leyen’s presence in the signing ceremony is another sign of the EU’s great interest in the project.

During the meeting, President von der Leyen defined the project as vitally important for the security of the EU and expressed the readiness of the European Commission to provide financial assistance to the project once the feasibility study results are made available in September next year. Experts argue that the new cable could transform Georgia into an electricity hub and integrate it into the EU internal power market, while it could also help start rebuilding Ukraine's energy system and the country's reconstruction. Reportedly, the process of laying the cable will take six years.

As for Georgia, with the new deal, Tbilisi's role as a European gateway gained more prominence amid bitter relations and the local authorities’ criticism of the EU. Indeed, Georgia’s strategic geographic location makes it a natural bridge between the West and the East, serving as a gateway for eight landlocked countries of South Caucasus and Central Asia. If successful, the EU could foster more similar projects in the region using Georgia as a safe passage. According to Olivér Várhelyi, the EU Commissioner for Neighborhood and Enlargement, the EU would allocate EUR 17 billion for the economic and investment plan of the Eastern Partnership (EaP), including EUR 2.3 billion aimed at creating the Black Sea strategic submarine electricity cable between Georgia and the EU.

While the new deal with Romania and Hungary boosts Azerbaijan's role as an important energy supplier to Europe following Moscow's military intervention in Ukraine. Official Baku already signed agreements with the EU in 2021 to increase natural gas volumes to Europe by 40% in 2022 compared to 2021 to 11.5 billion cubic meters. The energy partnership of Azerbaijan is not limited to the EU countries, as Baku is simultaneously developing energy partnership with non-EU states like Serbia, North Macedonia, and Albania for additional gas volumes and electricity power.

Moreover, the EU members like Romania and Bulgaria recently signed a separate agreement with Azerbaijan to import natural gas. For instance, on December 16, Azerbaijan’s State Oil Company of the Republic of Azerbaijan (SOCAR) and Romania’s Romgaz S.A signed a new deal on gas supply to Romania from Azerbaijan, even though the volume is not that significant. Azeri gas will flow to Romania via the newly established Greece-Bulgaria interconnector. A similar deal was reached with Albania when President Ilham Aliyev, upon the invitation of his Albanian counterpart, paid an official visit to Tirana to discuss new ways of enhancing energy cooperation.

Albania co-hosts the TAP pipeline, part of the flagship projects Southern Gas Corridor, which brings gas from Azerbaijan through Turkey and Greece to Italy and will increase Albania's and EU's energy security, a vital feature of the cooperation between the two countries.

Obviously, the new quadrilateral deal between Romania, Hungary, Georgia, and Azerbaijan will be an additional asset for the EU while enabling the latter to export green energy to Europe in addition to fossil fuels. Undoubtedly, such perspectives will give Azerbaijan powerful leverage and boost its image as an important and stable partner in Europe's energy security.