Azerbaijan can play a special role in energy security in the new global environment, considering Russia’s invasion of Ukraine and transition to a green economy.
Baroness Emma Nicholson of Winterbourne, the UK Prime Minister’s Trade Envoy to Azerbaijan and Kazakhstan, highlighted London’s powerful partnership with Baku particularly in clean energy as well as the Central Asian country’s contribution along with its Caspian neighbor, Kazakhstan, to stabilizing global energy supplies and their transportation.
“We are confident that Azerbaijan is right in the forefront of global energy security,” Nicholson told NE Global during an interview on the sidelines of the 28th Baku Energy Forum on June 1. “Britain is the largest foreign investor in Azerbaijan, so we are really delighted to be their active partner. It’s a very exciting moment because transitioning to clean energy is difficult and we’ve been doing it with them but I’m very happy indeed on both sides on this incredibly powerful partnership,” she added.
UK companies’ experience back Azerbaijan’s energy transition
According to the Baroness, in the last few years London’s trade and economic relationship with Baku, originally based primarily on oil and gas, has rapidly developed, and diversified into new markets, with a new and additional focus on clean energy. The UK was the main sponsor of the Offshore Wind Roadmap for Azerbaijan, which was launched jointly with the World Bank and the International Finance Corporation (IFC) during the 2022 Baku Energy Week. If developed at scale, offshore wind offers an opportunity for Azerbaijan to increase its exports of both electricity and natural gas through reduced domestic consumption and power generation, according to a publication issued by the UK Department of Business and Trade. Other areas of cooperation include decarbonization, development of green hydrogen in Azerbaijan, electrification of oil and gas platforms, energy innovation zones and energy storage solutions. Britain has also been sharing UK knowledge and experience through the Government-to Government Working Group.
In light of the Russian-Ukrainian war, Central Asia countries can play an important role in exporting energy and raw materials, including oil from Kazakhstan as well as gas and renewable energy from Azerbaijan to Europe.
Nicholson said she also visited Kazakhstan recently. “We are strong in Kazakhstan. We have the Almaty International Finance Center for example, which is unique and quite amazing but here in Azerbaijan their energy potential, particularly clean energy with Britain as a partner is outstanding. I’m very happy to be here. We’re very lucky to be Azerbaijan’s prime partner and that’s continuing,” she said in Baku.
Europe’s energy independence and security
“Azerbaijan has always been the main locomotive of energy route projects, and this constant line of our energy policy is still relevant today,” Azerbaijan’s Energy Minister Parviz Shahbazov said opening the forum. “We talked about initiatives that will strengthen Azerbaijan’s strategic position in regional and EU energy security in the new global energy order. This platform, which has strengthened our reliable partnership for years, is a mirror of Azerbaijan’s energy policy,” he said.
Despite Brexit, the Baroness told NE Global that the UK’s relationship with the European Union is stronger but stressed that Europe needs to change. Nicholson said Russia’s invasion of Ukraine has boosted Europe’s energy independence and security. “In a way I’m sure he did not want – if you look at the way that NATO now has Finland as a member and any minute now following the Turkish election I foresee that Sweden will be joining – but over and above that by the European Union’s brave and brilliant decision in my view to start incorporating Ukraine and Moldova, the entirety of the shape of the European Union must change so this a challenge and an excitement I don’t think Mr (Russian President Vladimir) Putin meant to do. But that’s what he has done. In that sense he has vastly strengthened the whole continent of Europe outside his particular patch and energy security could never be more important in modern times than today because of that,” Nicholson said.
At the same forum, the Czech Republic’s Minister of Industry and Trade Jozef Sikela told NE Global that his country was initially shocked after Russia invaded Ukraine, but it forced the Central European state to become more independent.
“Looking back this is a very exciting story because even the Russians were telling us, ‘You will freeze without our gas and oil,’” Sikela said. “But we successfully solved the gas problem. Of course, you cannot replace 155 bcm (billion cubic meters) overnight. It takes time but Europe has shown unity, solidarity and especially the ability to solve this issue with the construction of new LNG (Liquefied Natural Gas) terminals, with readiness to turn around the flows and the same will happen with crude oil and the same will happen with the nuclear fuel. And I strongly believe that starting with 2024 the story of European dependence on the Russian fossil fuels is over,” he said.
Azerbaijan’s Energy Minister Shahbazov said he discussed with Sikela the role of Azerbaijan in the supply of crude oil to the Czech Republic, including cooperation opportunities with Czech companies in the development of energy relations, the production of solar panels and wind turbines.
Sikela told NE Global that Azerbaijan will play a very important role in the new infrastructure of the energy security with their crude oil and gas supply capabilities. “Of course, there are routes and interconnectors to be solved on the other side although for the future with their load capacity offshore, with their green hydrogen and green ammonium production capacity it might become one of the most important suppliers of these strategic commodities to Europe,” Sikela said.
China’s global ambitions
Regarding Beijing, the Czech Minister said the reduction of global pollution cannot happen without decarbonization of the Chinese economy. But he warned that Europe must not become too dependent on raw materials from China, learning the lesson from becoming too dependent on Russian energy. “Of course, Europe has a relative dependence on green economy solutions coming from China – like solar panels and wind turbines. Europe will within a certain period of time not only have a look but also solve this issue because there will be more European production needed and more diversification needed,” he said and added, “I’m a former banker, educated risk manager and if you look at a company which has only one supplier and lacks independency this is a risk and this is valid in the macro economy and should be valued also on the global sense.”