Azerbaijan’s energy policy: Results, problems, prospects

Following the dissolution of the U.S.S.R. Azerbaijan gained an opportunity to shape its energy policy based on its own national interests. In the several years after attaining independence, Azerbaijan’s energy policy was heavily influenced by in­ternal events related to the power struggle within the Azerbaijani elite. This impeded the expansion of Azerbaijan’s cooperation with Western oil and gas companies, which expressed an increased interest in this Caspian state’s petroleum resources. Internal political struggles did not affect the country’s energy policy priorities. The latter involved, first and foremost, the choice of strategic partners for cooperation that would allow Azerbaijan to expect an increase in oil and gas production. The choice was made in favor of foreign petroleum companies and strengthening relations with Western states. Their support played a key role in further development of petroleum fields and the choice of routes for oil export. Between 1991 and 2017, Azerbaijan’s energy policy went through several stages. In the early 1990s, Azerbaijan focused on oil production, engaging Western petroleum companies, whose interest was sparked by evidence of considerable petroleum reserves, in field development. Azerbaijan possessed well-developed infrastructure and experienced personnel, and had longstanding oil production traditions that arose in the 19th century, when Baku was the world capital of oil production. The key goal of Azerbaijan’s energy policy was not merely to increase Caspian oil field production volumes, but also to construct new pipelines that would ensure the delivery of Azerbaijani oil to export markets. Azerbaijan managed to achieve substantial progress in this area, having built new pipelines for exporting oil with the assistance of the petroleum business community and Western countries. In addition, the surge in oil production volumes allowed Azerbaijan to stabilize the political situation and resolve social and economic issues that emerged following the disintegration of the Soviet Union due to the disruption of trade and economic bonds with ex- Soviet republics. In the early 21st century, Azerbaijan’s energy policy underwent a major transformation. Having begun its development as an oil state, Azerbaijan has consequently focused on developing gas fields that were discovered in the course of oil field development. Proven gas reserves and gas production volumes allowed Baku to plan an increase of exports to outside markets. In recent years, Azerbaijan has been pursuing an energy policy that aims to secure its role as a petroleum resource exporter to European countries. The expansion of cooperation with Turkey is contributing to the resolution of this issue. Cooperation between Azerbaijan and Turkey allowed to begin the implementation of new gas pipeline projects, the construction of which will increase the volume of Azerbaijan natural gas deliveries to outside markets. Azerbaijan’s energy policy is in keeping with EU interests, which regards Caspian energy resources as an alternative to Russian gas export. © 2017, CA and CC Press AB. All rights reserved.