In a significant move towards energy diversification, Germany and Azerbaijan have announced plans to strengthen their cooperation on energy exports to Europe. Speaking at a press conference in Berlin, Chancellor Friedrich Merz and Azerbaijani President Ilham Aliyev expressed their commitment to enhancing energy supply ties. The announcement comes as Europe grapples with the ongoing war in Ukraine and the recent conflict in the Middle East, which has disrupted traditional energy routes.
The two leaders signed a 'strategic agenda' that includes cooperation on 'energy flows, including gas.' Azerbaijan, which has emerged as a crucial energy supplier for Europe, began delivering gas to Germany earlier this year. However, Aliyev emphasized the need for new interconnections and gas pipelines, as well as funding for necessary investments to increase gas supply.
The Trans Adriatic Pipeline (TAP) and the Trans Anatolian Pipeline (TANAP), which transport gas from Azerbaijan to Europe via Georgia and Turkey, are currently operating at full capacity. Aliyev noted that TAP's capacity could be doubled, but this would require substantial investment. He called on European banks to reconsider their decisions to stop financing fossil fuel projects, especially given the 'worsening' situation in the Middle East and the impact on Russian refineries.
The Iran war has further complicated energy supplies, causing export difficulties for major producers like Qatar and driving up gas prices. According to a forecast by Germany's Ifo economic institute, the surge in fuel prices due to the closure of the Strait of Hormuz is expected to cost Germany 0.4 percentage points of GDP growth in 2026 and 2027.
This push for closer energy ties between Germany and Azerbaijan underscores the shifting dynamics in global energy markets. As Europe seeks to reduce its dependence on Russian energy, countries like Azerbaijan are stepping up to fill the gap. The new strategic agenda signed by the two nations aims to ensure a more stable and diversified energy supply for Europe, despite the challenges posed by geopolitical conflicts and market disruptions.
