Why does Azerbaijan matter to the European Union? Opinion my Nikola Mikovic

In his latest piece for Global Comment, Nikola Mikovic explains the EU's ambitions to build a long-term partnership with Azerbaijan and ponders its role in Europe's energy security. Caliber.Az reprints the article.

Despite relatively tense political relations between the European Union and Azerbaijan, Brussels is aiming to strengthen energy cooperation with Baku. In an attempt to end its dependency on Russian fossil fuel imports by 2027, the EU plans to continue increasing natural gas imports from the energy-rich South Caucasus nation, and also to begin purchasing “green” electricity from Baku.

As Azerbaijan prepares to host the 29th United Nations Climate Change Conference (COP29) later this year, the EU is seeking to join the United Arab Emirates, Saudi Arabia and China, as well as other actors interested in developing the former Soviet republic’s green energy sector.

The EU’s logic is very simple – the bloc wants to import not only fossil fuels from Azerbaijan but also electricity that will be produced in “green zones” in the South Caucasus nation of around 10 million people.

After Baku resolved the Karabakh issue in its favour, the Azerbaijani government began the realization of its plans to transform the region, as well as surrounding areas, into a “Net-Zero Emission Zone” that will produce green energy. If Azerbaijan manages to achieve its ambitious goal, and renewables constitute 30 per cent of the country’s electricity-generating capacity by 2030, Baku will be in a position to export significant parts of its “green electricity” through the Caspian-EU and Azerbaijan-Turkey-Europe transport corridors.

Back in December 2022, Azerbaijan, Georgia, Romania, and Hungary signed a strategic partnership agreement that provides for the construction of an “energy bridge” from the Caucasus region to Europe. The cable is intended to transmit Azerbaijani “green electricity” routed through Georgia and the Black Sea to Romania, and further distributed to Hungary and the rest of Europe. It is, therefore, no surprise that the EU’s energy officials recently announced their plans to strengthen the bloc’s partnership with Baku in the field of renewable energy.

In June 2024, at the Baku Energy Forum, energy experts and leaders from Europe, as well as from other continents, are expected to discuss global energy security and the role of Azerbaijan’s energy sector in European energy security. More importantly, the fact that the South Caucasus nation has been announced as the host of this year’s COP 29 UN Climate Change Conference scheduled for November – even though its economy still heavily relies on fossil fuels – indicates that not only European but also global policymakers, see the geostrategic importance of the Caspian country.

For the EU, Azerbaijan is a significant energy supplier – be it in the form of fossil fuels, or “green electricity”. For China, the South Caucasus nation is an important transit country in its Belt and Road Initiative, while for Russia, Baku is an economic partner that, despite sanctions that the West has imposed on Moscow, remains engaged in energy cooperation with the Russian energy giant Gazprom.

In November 2022, Gazprom and the State Oil Company of the Azerbaijan Republic (SOCAR) signed an agreement on the delivery of one billion cubic meters of Russian natural gas between November 2022 and March 2023. However, rumors of Azerbaijan allegedly reexporting Russian gas to the EU quickly began to fly, but the Caspian nation’s President Ilham Aliyev denied such accusations, claiming that Baku was using Russian natural gas exclusively for its own industry.

Indeed, the deal between Gazprom and SOCAR gave Baku enough room to purchase relatively cheap Russian gas and use it for its domestic market, while exporting its own natural gas to Europe, increasing revenues.

Ever since the European Commission and Azerbaijan signed a 2022 Memorandum of Understanding to double imports of Azeri natural gas to at least 20 billion cubic meters a year by 2027, Baku has been constantly increasing its gas supplies to Europe. For instance, in 2021, Azerbaijan exported 8.2 billion cubic meters of natural gas to Europe, while in 2022 Baku supplied a total of 11.4 billion cubic meters of its gas to the European market. In 2023, the South Caucasus nation exported almost 12 billion cubic meters to Europe, while a number of EU countries are aiming to increase gas imports from Azerbaijan.

On April 25, 2023, a memorandum of understanding was signed to develop cooperation between gas transmission system (GTS) operators in Bulgaria (Bulgartransgaz), Romania (Transgaz), Hungary (FGSZ), Slovakia (Eustream) and SOCAR within the framework of the Solidarity Ring – the EU initiative that aims to enable additional gas deliveries from alternative sources (Azerbaijan) for European customers. Moreover, Serbia, the EU candidate, is also interested in purchasing Azerbaijani gas. In December 2023, the Serbia-Bulgaria 170 kilometres (105 miles) long gas interconnector was officially put into trial operation, which opened the possibility for the Southeast European nation to procure gas from Azerbaijan, and reduce its dependence on Russian natural gas.

Thus, given the importance of Azerbaijani energy for Europe – which desperately needs the South Caucasus nation’s natural gas to wean itself off of Russian fossil fuels – political relations between Brussels and Baku are unlikely to become increasingly strained, regardless of a tense situation in the South Caucasus, and a potential military conflict between Azerbaijan and Armenia.