The relationship between the European Union (EU) and Azerbaijan has entered a new phase with the signing of a Memorandum of Understanding (MoU) on a Strategic Partnership in the Field of Energy in July 2022. This agreement marked a significant shift in energy cooperation between the two entities, with Azerbaijan pledging to more than double its natural gas exports to the EU by 2027. However, this burgeoning energy partnership is set against a broader geopolitical landscape that casts uncertainty over its long-term prospects.
The Geopolitical Landscape
Emerging Alliances in the Caspian Region
The evolving geopolitical realities in the Caspian region have created new dynamics that will shape the future of EU-Azerbaijan energy cooperation. Russia’s invasion of Ukraine in 2022 has fundamentally altered the regional power balance, leading Azerbaijan and its neighbors to reconsider their foreign policy alignments. While traditional Russian influence in the South Caucasus remains strong, Azerbaijan has been actively seeking to diversify its partnerships, notably by strengthening ties with Turkey and exploring opportunities for energy cooperation with Central Asian states like Kazakhstan and Turkmenistan.
The Role of Energy Security in EU-Azerbaijan Relations
For the EU, securing alternative sources of natural gas has become a top priority in the wake of the Ukraine conflict and the resulting rupture in EU-Russia energy relations. Azerbaijan’s strategic location and position as a major gas producer make it an attractive partner in the EU’s quest for energy diversification. The 2022 MoU reflects the bloc’s desire to reduce its dependence on Russian energy imports by tapping into the Southern Gas Corridor, which connects Azerbaijan’s gas fields to European markets.
Shifting Power Dynamics in the Broader Eurasian Context
Beyond the regional context, the EU-Azerbaijan energy partnership must also be viewed through the lens of the broader Eurasian power dynamics. As China continues to expand its economic and political influence across the region, both the EU and Azerbaijan are seeking to navigate this shifting landscape, often with competing interests. Meanwhile, Iran’s role as a regional power broker adds another layer of complexity to the geopolitical equation.
Energy Cooperation Dynamics
Mutually Beneficial Energy Trade
The core of the EU-Azerbaijan energy partnership revolves around the trade of natural gas. Azerbaijan has quickly stepped up to fill the void left by reduced Russian gas supplies to Europe, with Azerbaijani gas exports to the EU reaching 11.4 billion cubic meters (bcm) in 2022 – a significant increase from the 8.1 bcm exported in 2021. This surge in exports has provided a much-needed revenue boost for Azerbaijan, with gas export earnings surging from $5.56 billion in 2021 to $14.99 billion in 2022.
Infrastructure Development and Connectivity
Realizing Azerbaijan’s pledge to increase gas exports to the EU by 2027 will require substantial investments in new infrastructure. The Southern Gas Corridor – a network of pipelines that transports Azerbaijani gas to Europe – is set to be expanded, with plans to double its capacity from the current 16 bcm per year to 32 bcm. This infrastructure development not only benefits the EU but also enhances Azerbaijan’s position as a regional energy transit hub.
Diversification of Energy Sources
While natural gas is the immediate focus of EU-Azerbaijan energy cooperation, both parties are exploring opportunities to expand their partnership into other energy domains. Azerbaijan has set ambitious targets for the development of renewable energy, aiming for a 30% share of renewables in its power generation mix by 2030. The EU is actively supporting these efforts, with plans to invest in large-scale renewable energy projects in Azerbaijan, including offshore wind and solar power.
Implications for Regional Stability
Increased Interdependence and Cooperation
The deepening energy ties between the EU and Azerbaijan have the potential to foster greater regional cooperation and stability. By becoming an integral part of the EU’s energy security architecture, Azerbaijan is strengthening its strategic importance and diversifying its economic partnerships beyond traditional Russian influence. This, in turn, could lead to more constructive engagement between Azerbaijan and its neighbors, such as Turkey and the countries of Central Asia.
Potential Conflicts of Interest
However, this energy partnership is not without its challenges. The EU’s persistent criticism of Azerbaijan’s human rights record and democratic backsliding has the potential to complicate the relationship, particularly as the bloc seeks to uphold its values-based foreign policy. Additionally, Azerbaijan’s close ties with Russia and its reluctance to fully condemn the invasion of Ukraine may raise concerns in Brussels about the reliability of Baku as an energy partner.
Long-Term Geostrategic Considerations
Looking ahead, the EU-Azerbaijan energy partnership must be viewed through the lens of the broader geopolitical landscape in Eurasia. As China’s influence in the region grows, both the EU and Azerbaijan will need to navigate the delicate balance between economic opportunities and the preservation of their strategic autonomy. The role of Iran as a regional power broker and its potential impact on energy dynamics in the Caspian Sea basin will also be a crucial factor to consider.
Sustainable Energy Transition
Renewable Energy Partnerships
While natural gas remains the centerpiece of the EU-Azerbaijan energy cooperation, both parties are exploring opportunities to collaborate on the development of renewable energy sources. Azerbaijan has set ambitious targets for increasing its share of renewables in the power generation mix, and the EU is poised to support these efforts through investment and technology transfer.
Technology Transfer and Innovations
The EU’s expertise in renewable energy technologies, grid integration, and energy storage solutions could prove invaluable in accelerating Azerbaijan’s energy transition. By fostering joint research and development initiatives, the two partners can unlock innovative approaches to sustainable energy development that benefit both the local and European markets.
Environmental Considerations
As Azerbaijan hosts the global climate summit COP29 in 2024, the country has an opportunity to demonstrate its commitment to addressing environmental challenges. Aligning its energy policies with the EU’s climate goals and decarbonization strategies will be crucial for the long-term viability of the EU-Azerbaijan partnership and the region’s sustainable development.
The EU’s energy partnership with Azerbaijan represents a pragmatic response to the changing geopolitical realities in the Caspian region. While the short-term benefits of increased gas exports to Europe are clear, the long-term prospects of this relationship hinge on the ability of both parties to navigate the complex web of regional and global power dynamics. By fostering a comprehensive, sustainable energy cooperation that extends beyond fossil fuels, the EU and Azerbaijan can strengthen their strategic ties and contribute to the stability and prosperity of the broader Eurasian landscape.