Azerbaijan has signed agreements representing more than $10 billion in potential investment while advancing major oil and gas projects that could expand the country’s role in European energy supply.
The agreements were announced during an international investment forum in Baku.
Among the most significant developments, state-owned SOCAR, TotalEnergies and Abu Dhabi-based XRG reached a final investment decision for full-field development of the Absheron gas and condensate field.
Azerbaijani President Ilham Aliyev said the second phase of Absheron could increase national gas production by approximately 5 billion cubic meters within three to four years.
That additional production has strategic significance for Europe.
Azerbaijan exported approximately 25 billion cubic meters of gas last year, with roughly half going to European Union countries.
Additional exports to Europe would, however, require greater pipeline capacity, meaning increased production does not automatically translate into equivalent increases in European deliveries.
A separate agreement expands the involvement of U.S. energy companies.
SOCAR and ExxonMobil signed a production-sharing agreement covering exploration, development and production of unconventional hydrocarbon resources in Azerbaijan’s Middle Kura basin.
Each company will hold a 50% interest, with ExxonMobil serving as operator.
Azerbaijan is simultaneously attempting to diversify beyond hydrocarbons.
Aliyev said the non-oil sector now accounts for more than 70% of gross domestic product, although oil and gas still generate more than 90% of exports.
The government is also negotiating with international companies over potential data-center and artificial-intelligence projects.
Transit infrastructure is another component of the strategy. Azerbaijan expects cargo volumes moving through the country to reach approximately 16 million metric tons this year and is targeting at least 25 million tons by 2030.
For European energy markets, the key development is Absheron.
Higher Azerbaijani production could provide additional diversification at a time when geopolitical disruptions have increased the value of alternative gas suppliers.
Markets should watch the timetable for Absheron’s second phase, investment in export-pipeline capacity and the development of the ExxonMobil-SOCAR Middle Kura project.
