Azerbaijan’s Deputy Energy Minister warns EU: “We need more flexible regulations”

from our correspondent in Baku – The European Union remains “the main strategic partner of Azerbaijan” on the energy front, but Europe’s growing push towards decarbonisation and renewable energy is causing increasing concern for one of the continent’s main suppliers of gas and oil, namely Azerbaijan. These fears were explored by Azerbaijan’s Deputy Minister for Energy, Orkhan Zeynalov, speaking to journalists in the Azerbaijani capital. Although relations between Baku and Brussels remain “excellent” and are set to strengthen further with a new meeting “scheduled for the autumn,” he explains, “there is a need for energy regulations to be more flexible, to take into account the needs of individual states,  and to be accessible to businesses.”

Relations between the European Union and Azerbaijan are based on the Partnership and Cooperation Agreement, which entered into force in 1999 and continues to provide the legal framework for bilateral cooperation. In recent years, particularly following Russia’s invasion of Ukraine and the ensuing European energy crisis, the relationship has been further strengthened. In 2022, Brussels and Baku signed a Memorandum of Understanding on the strategic partnership in the energy sector, aiming to increase Azerbaijani gas supplies to Europe via the Southern Gas Corridor. According to Zeynalov, the cooperation has evolved into a “satisfactory partnership, which always has room for further strengthening.”

According to the Deputy Minister, recent geopolitical tensions have also demonstrated Azerbaijan’s central importance to European energy security. “The recent tensions in the Strait of Hormuz have demonstrated the need for secure supply lines and just how crucial diversification is,” he explained. According to the Deputy Minister, the tensions in the Strait of Hormuz have confirmed Azerbaijan’s central role in European energy diversification strategies. “The importance of Azerbaijan and the central energy corridor. It has highlighted the vulnerability that stems from dependence on a single energy source and demonstrated the resilience and importance of oil and gas pipelines, which do not depend on maritime dynamics.“

According to Zeynalov, it is precisely the ability to offer alternative land routes that is now one of the Caucasian country’s main strengths. “In the case of Azerbaijan, our supplies of crude oil and natural gas to Europe have not been affected in any way. On the contrary, they have generally increased, highlighting the importance of the central corridor through which Azerbaijan and Central Asia pass.”

The Deputy Minister went on to stress that the energy relationship between the two sides is now one of mutual dependence. “Today we export gas to sixteen countries, ten of which are in the European Union and eleven in NATO. It is obvious that we depend heavily on Europe, but there is also a dependence on both sides.“

Baku’s calls for greater flexibility come against the backdrop of a European context that is increasingly focused on decarbonisation. In recent years, Brussels has accelerated the implementation of the Green Deal and the legislative package “Fit for 55, which aims to drastically reduce emissions by 2030 and strengthen renewables as sources of energy supply. This shift towards greener resources was also discussed by the Commissioner for Oceans and Fisheries, Costas Kadis, in an interview with Eunews: “Renewables, nuclear, and, only if necessary, fossil fuels.”

For a country like Azerbaijan, whose economy remains heavily reliant on hydrocarbon exports, this development represents both a challenge and an opportunity. It is no coincidence that energy cooperation between Brussels and Baku no longer concerns only gas and oil: the 2022 memorandum also includes the development of renewable energy, the reduction of methane emissions, energy efficiency, and projects to export green energy from the Caspian Sea to the European market.

Whilst focusing on relations with the European Union as a whole, Zeynalov was keen to stress Italy’s role as a preferred partner. “We love Italy. It is the leading market for our crude oil exports and the second largest for gas,” he said. But Rome is not merely an energy customer. “For us, Italy is also strategic as a gateway to other Western European countries.” Among the markets of greatest interest to Baku are Austria and Germany, whilst the Azerbaijani government is also looking at new opportunities in the Balkans and in countries outside the European Union such as Serbia and San Marino. This is a sign confirming Azerbaijan’s desire to consolidate its role as an energy hub between Asia and Europe.