The Russian energy giant Gazprom announced in January that it had signed a deal to double gas purchases from Azerbaijan. In an email interview, Shahriyar Nasirov, a doctoral candidate at the University of the Basque Country and a research fellow in the energy department of the Orkestra-Basque Institute of Competitiveness, discussed Azerbaijan’s energy sector.
WPR: How has Azerbaijan's energy sector evolved over the past 10 years, and what are its current strengths and weaknesses?
Shahriyar Nasirov: Azerbaijan’s major strengths are the existence of a stable legal framework and attractive environment for foreign investors in the energy sector, and the provision of a predictable legislative and regulatory framework for oil contracts. Thanks to these factors, total energy production has increased almost three-fold every year for the past 10 years. Azerbaijan’s already significant oil and gas revenues, valued at $40 billion in 2010, are expected to reach $200 billion in 2024. The construction of the world’s biggest pipeline projects -- the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and the South Caucasus gas pipeline -- helped to eliminate transport constraints and end Azerbaijan’s dependence on Russian transit routes. The huge inflow of foreign investment combined with the country’s skyrocketing oil revenues and the construction of regional energy projects, have led to a growing self-confidence in Azerbaijan regarding its geopolitical role.