Azerbaijan positions itself as dual-track energy hub amid global supply uncertainty

Azerbaijan is accelerating both fossil fuel and renewable energy development as it seeks to entrench its role as a reliable supplier to Europe and emerging markets, Energy Minister Parviz Shahbazov said at the 31st Baku Energy Forum.

The minister's remarks, delivered across several forum sessions, laid out an ambitious pipeline of upstream projects, cross-border power corridors and new trading partnerships stretching from Indonesia to Egypt, as Baku argues that geopolitical turbulence has raised the premium on dependable supply.

Azerbaijan supplied 8.1% of the EU's pipeline gas imports last year, exporting 16.7 bcm to Europe and 12.8 bcm to Turkey in 2025 and the first four months of 2026 combined, with a further 3.3 bcm going to Georgia and 800 mcm to Syria, Shahbazov said. The country now delivers oil to more than 20 countries and gas to 16, a geographic reach the minister said places Azerbaijan among the leading pipeline exporters globally.

The Strait of Hormuz crisis and disruptions to roughly one-fifth of global oil and liquefied natural gas (LNG) supply have reinforced Azerbaijan's strategic value, Shahbazov argued. "This uncertainty raises Azerbaijan's importance. We are turning the Caspian Sea into a key operational capacity," he said.

On the upstream side, first output from the associated gas project at the Azeri-Chirag-Gunashli (ACG) block has already begun. The Karabakh oil field is scheduled to come on stream in 2027, followed in 2029 by the Shah Deniz compressor project, full-scale development of the Absheron field, the Umid Phase 2 gas project and the Babek gas project. SOCAR's investment activity in the Middle East, Central Asia and Africa is intended to sustain Azerbaijan's producer and supplier role over the long term, Shahbazov said.

A regulatory risk hangs over global supply. EU methane emission regulations coming into force next year could leave up to 87% of global oil and 43% of international gas struggling to meet compliance thresholds by 2027, creating fresh supply-shock exposure, the minister warned. Electricity demand driven by artificial intelligence data centres is growing roughly three times faster than overall energy demand, he added, a dynamic that strengthens the role of natural gas in the energy mix even as the energy transition accelerates. Critical minerals — copper, lithium and rare earths — are becoming a parallel strategic dependency as electrification deepens.

On renewables, Azerbaijan is completing grid studies aimed at raising the share of renewables in installed capacity to around 43% by 2035. Plans are under way to develop 8 gigawatts (GW) of renewable capacity by 2032 to serve domestic consumption, exports and AI infrastructure demand; 2 GW of that total is set to be integrated into the national grid by next year. A feasibility study for the Caspian-Black Sea-Europe green energy corridor, envisaged to transmit 3.9 GW in phased tranches from 2032, is due to be completed by July this year. A separate Central Asia-Azerbaijan energy corridor, financed by the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB), is expected to complete its feasibility study in May 2027.

Shahbazov also presented a Sustainable Development Goal 7 (SDG7) roadmap for Azerbaijan at the forum, which he described as defining the trajectory of the country's energy system and its transition to a low-carbon model.

Beyond Europe, Azerbaijan is expanding energy trade across the D-8 grouping of developing economies. SOCAR supplied approximately 2.5mn tonnes of Azerbaijani crude to Indonesia between 2022 and 2025. SOCAR Trading and Egypt's Egyptian General Petroleum Corporation (EGPC) signed a three-year LNG supply agreement last year, under which Azerbaijan has so far delivered more than 1.3mn tonnes of LNG to Egypt. Negotiations between SOCAR and Petro-Bangla on LNG supply to Bangladesh have been concluded, and the minister flagged Malaysia's technical expertise and Nigeria's gas reserves as further partnership opportunities.