BAKU, Azerbaijan, July 20. The memorandum of understanding signed between the EU and Azerbaijan on July 18 is a victory for both sides, and especially for Azerbaijan in terms of being treated as the EU's strategic partner, the former US ambassador to Azerbaijan, Matthew Bryza told Trend.
“This latest memorandum of understanding between the EU and Azerbaijan on strategic energy partnership is quite significant. It is a broad agreement that reflects and balances the primary interests of each party and harmonizes them. One of the passages talks about how the sides promise to work together to ensure stable and predictable delivery of natural gas to the EU. So that’s a key goal for the EU to get non-Russian natural gas. But then continues to say in a manner that is consistent with the EU’s long-term decarbonization objectives. So, the EU is saying “we want gas, we need it now, but over time we want to consume less and less gas, because we have our decarbonization objectives”. Then it says, it is based on the long-term partnership between the sides and the principle of market-oriented pricing. So, market-oriented pricing is what Azerbaijan really wants. It wants to know that over time it can rely on prices determined by the energy market rather than by governments when selling its natural gas. Azerbaijan also wants to make sure that the EU will indeed continue investing in natural gas infrastructure, even as if it pursues its decarbonization goals. That’s one important set of points,” he said.
Bryza noted that another important set of points is that the EU acknowledges that natural gas will continue to play an important role in its energy consumption and electricity generation until 2030 and that after 2030 the EU will over time replace natural gas with renewable energy sources with the objective of being carbon neutral by 2050.
“Again, the EU is offering Azerbaijan assurances that at least for the next eight years natural gas will be an important part of the EU’s energy mix in terms of consumption, but after the EU will start to try to decrease its consumption of natural gas. That’s a really important point because in recent months, before the war in Ukraine, EU looked like it might be preparing to eliminate natural gas as a source of green energy that would then prevent continued investment by the EU in natural gas projects. It is now clear that the EU wants to continue investing in natural gas infrastructure and buying natural gas. Because obviously, it faces urgent need to move away from Russian-sourced gas. But again, the EU wants to do all of this in conjunction with its goals of carbon-neutrality by 2050,” said the former US ambassador.
He went on to add that there are a lot of discussions about renewable energy and cooperation between the private sector and public sector companies to develop the technologies and capabilities to deliver green energy from Azerbaijan to Europe.
“This has been the big goal of Azerbaijan as well to increase its wind and solar power generation and the potential in Azerbaijan of course, is enormous for both wind and solar. I know that the intensity of the sun in southern parts of Karabakh and Nakhchivan is really high and therefore, creates great potential for solar power. Of course, everybody knows how sustainable, strong winds are on the Absheron peninsular, in Baku and elsewhere in Azerbaijan. This seems to be a really strong area of cooperation now going forward between the EU and Azerbaijan meaning renewable energy,” said the former US ambassador.
Bryza pointed out that the primary focus of the MoU is on delivering more gas via Azerbaijan to the EU now and in the near future.
“The MoU talks about the joint commitment to expand the Southern Gas Corridor into perhaps the Western Balkan and it talks about the EU pledging to continue to find financing for these projects, such as the expansion of the Southern Gas Corridor. That has been a real interest of SOCAR. Again, as it seemed like maybe the EU was going to try to stop consuming and investing in natural gas. So, it is very important for SOCAR that the EU is saying that it is committed to investing in expansion of the Southern Gas Corridor. Also, interesting to me is the mention of possibility of cooperating to develop electricity links for green energy between Azerbaijan and under the Black Sea to the EU and also through Nakhchivan. That’s something to keep an eye on,” he added.
Bryza notes that both sides commit to reduce methane emissions, which means by reducing the amount of natural gas that escapes when natural gas or oil are produced.
“Some of that natural gas escapes when there is gas associated with oil production and then that natural gas is either burned or simply vented into the atmosphere. In this MoU both sides pledge to capture that gas and use it rather than sending it into the atmosphere. Natural gas also escapes during pipeline operations and other ways of natural gas production operations. So the two sides pledge to cooperate to reduce such emissions in accordance with the global methane reduction pledge. So, it is a very forward-looking agreement very balanced between natural gas and renewable energy. The headline goal where everyone is focusing on in the media is this pledge of Azerbaijan to provide 20 bcm by 2027. Azerbaijan has a need to produce more natural gas. Azerbaijan needs to achieve that production level, to get 10 billion cubic meters more for the EU. It is going to require a lot of investment in Azerbaijan in new gas fields. It is going to require trading of natural gas that is produced by other countries like Turkmenistan with Azerbaijan serving as a transit country. The MoU says through production and trade to make sure that the EU can obtain another 10 bcm through bilateral trade, including exports from Azerbaijan, but not only,” he explained.
One final point is that the MoU also talks about working together to protect coastlines and environment in general from energy production and oil spills.
“I hope that Azerbaijan working with EU can launch a regional effort in the Caspian Sea to protect the Caspian marine environment against further oil spills. It has been an enormous amount of spills from Soviet-era pipelines. EU, Azerbaijan and Turkmenistan could cooperate on preventing and minimizing negative impact of oil spills in the Caspian Sea,” Bryza concluded.
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