The Current State of Azerbaijan's Gas Cooperation with Europe: Opportunities and Challenges-3

Azerbaijan's Shah Deniz and ACG fields, the pillars of the country's remaining hydrocarbon resources, are currently operating at a steady pace.

This article provides a comprehensive analysis of Azerbaijan's energy cooperation with Europe. It covers the supply of fossil fuels (oil and gas) and green energy, examining both retrospective and prospective dimensions. The analysis includes production levels, transport infrastructure, potential opportunities in this sector, and challenges, calling for further investigation. The article also assesses possible development scenarios and prospects for gas, oil, and renewable energy sources in Azerbaijan's energy sector.

Although the decrease in oil production in Azerbaijan since 2012 is often attributed to natural processes, it is not the only factor reducing the country's resource revenues. One of the factors contributing to the reduction in resource revenues is the increase in transportation, operational costs, and capital expenditures. The rise in these costs is linked not only to the profitability of project execution but also to the significant impact of global inflation indicators influenced by the COVID-19 pandemic and post-pandemic processes, which have reshaped the economic landscape.

The year 2024 presents significant challenges for Azerbaijan's oil and gas industry, indispensable in generating income and attracting investments for the independent Azerbaijani economy. The reduction in oil production (1), the increase in operational and transportation costs (2), and the relative decrease in global market prices (3) contribute to the decline in oil and gas revenues. This article explores the reasons for the declining resource revenues in Azerbaijan in recent years and assesses the current situation based on the factors above.