The world is ripe for more Azerbaijani energy

The AnewZ Opinion section provides a platform for independent voices to share expert perspectives on global and regional issues. The views expressed are solely those of the authors and do not represent the official position of AnewZ

Oil Worker’s Day celebrated in Azerbaijan on 20 September, is the perfect occasion to reflect on several current global developments that affect the global and Azerbaijani energy sector.  

First, the data indicates that demand for Azerbaijan’s oil and natural gas will continue for decades to come. Following the 1973 oil crisis, the major Western countries embarked on a policy of promoting use of renewable energy. At the time, fossil fuels provided 84.5 percent of global energy.

Today, fossil fuels provide 86 percent of global energy. There are no signs that demand for fossil fuels is declining. Renewable energy demand is growing, but demand for fossil fuels is growing even faster, especially for natural gas.  

Demand for all types of energy continues to grow. There are no signs indicating that any energy sources are replacing others. Growth in renewable capacity does not replace demand for gas, but actually creates new demand for gas, since gas serves regularly as the baseload capacity for renewables. 

With significantly increased global demand emerging for electricity to fuel AI and data centers and as economic growth continues to increase, demand for natural gas and coal will likely grow significantly. Nuclear energy will also likely grow.

The first stage of increased demand for electricity will be met mostly by natural gas, coal, and renewables since nuclear is much more capital intensive at the beginning of projects and takes much longer to bring on new capacity than gas, coal and renewables. 

New natural gas production in Azerbaijan, such as from Absheron field, is coming online as global gas demand is growing dramatically. Our timing is excellent. The price environment for natural gas will be favorable for at least a decade, due to this increased global demand for gas.  

The positive global gas price trend will help us develop and expand the Umid, Absheron and Garabagh fields. Moreover, several additional perspective structures, including Babek, Shafag-Asiman, Nakhchivan, and Zafar-Mashal have already shown promising signs and can serve as the basis for increased Azerbaijani gas production and exports.

The recent results of operations at Umid have especially bolstered our assessments of the prospects of neighboring fields. 

An important factor in success of Azerbaijan’s national oil and gas strategy developed and implemented under the leadership of President Ilham Aliyev is an independent analysis on global energy trends.

Azerbaijan’s decision to develop the Southern Gas Corridor, for instance, challenged the prevailing views in the energy industry and of most in Europe in the early 2010s. At that time many were claiming that LNG would replace international pipeline supplied gas. And, that demand for gas itself would decline, as an energy transition to renewable energy would soon take place.

President Ilham Aliyev guided SOCAR to continue to develop the Southern Gas Corridor, essentially understanding future European gas demand trends better than the Europeans themselves. President Aliyev foresaw that Europe would need additional gas imports and reliable suppliers.  

In addition to continued demand for Azerbaijani gas, growing global demand for natural gas will create new commercial opportunities for Azerbaijan to engage in gas infrastructure projects in multiple countries.  

Second, major world powers—such as Japan, South Korea and the United States-- are looking to diversify geographically the global sources of oil and natural gas. They seek to finance new energy infrastructure and production projects that will improve global energy security.

Global energy trade is currently obstructed at several major maritime passages—the Red Sea, Black Sea and Strait of Hormuz and uninhibited energy trade must increase. 

Recognizing the importance to energy security of geographic diversification, in the 1990s the US, Europe and more promoted the development of Azerbaijan’s oil and gas resources.  President Heydar Aliyev correctly recognized and fostered the global interest in energy diversification in this period and harnessed it to forge the Contract of the Century in 1994 and bring major foreign investment to Azerbaijan. 

However, by the 2010s, many states failed to continue to promote geographic diversification of energy suppliers. They fell under the illusion that an energy transition to renewable energy was imminent. 

Today’s renewed global interest in geographic diversification will likely bring new investments in Azerbaijan’s energy sector. 

In addition, SOCAR has recently expanded its geographic footprint, both in exploration in oil and gas and as an investor. Our investments in the Tamar field in East Mediterranean and the Baleine oil and gas field in Côte d'Ivoire, places SOCAR at projects that are not affected by the globe’s major energy chokepoints. We are also increasing our gas exploration efforts in Central Asia and supplying gas to Syria.  

In Israel’s Exclusive Economic Zone, SOCAR is not only an investor but an operator at six new exploration licenses. This will allow SOCAR to gain operational expertise that we can apply to future projects around the globe and to develop further our role as an international energy company.  

We are also initiating an investment in the United States, the world’s top producer of oil and natural gas. The current global energy crisis has boosted US production and global demand for its energy. SOCAR’s recently established strategic partnership with Comstock Resources will enable SOCAR to engage in a new sector—unconventional oil and gas resources. The partnership with Comstock Resources will help us to learn and attain ability to develop unconventional energy in Azerbaijan and abroad. 

Third, Azerbaijan’s relations with its neighbors creates new opportunities for energy trade. The cooperation between brotherly Türkiye, Azerbaijan and the Central Asian states is rapidly deepening.  

Türkiye is a particularly important partner in this context. The country is home to several major SOCAR assets, including the STAR Refinery and Petkim complex near İzmir, while also serving as a key transit hub for the Baku–Tbilisi–Ceyhan pipeline and an integral part of the Southern Gas Corridor. 

Simultaneously, cooperation with the Central Asian states is also rapidly deepening. Azerbaijan and Uzbekistan continue the geological exploration at Ustyurt investment blocks in addition to SOCAR planning to expand its filling stations network in Uzbekistan. 

These developments lead to increased energy cooperation and investments within the region. In addition, the peace process with Armenia and the establishment of the TRIPP route along the Zangezur Corridor, creates an additional route for energy trade. 

Through these diverse professional engagements and investments, SOCAR has emerged as a vertically integrated energy company. In the three decades since Azerbaijan restored its independence, this is a major feat.  

While many challenges are ahead, the current global environment creates many opportunities for SOCAR and Azerbaijan to continue to forge ahead.  

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