Azerbaijani gas in Germany’s energy mix: A strategic shift

On Tuesday, German Vice-Chancellor and Minister for Economic Affairs and Climate Action, Robert Habeck, who was in Baku to attend the COP29 climate conference, met with Azerbaijan's Minister of Energy Parviz Shahbazov and Minister of Economy Mikayil Jabbarov. Alongside discussions on green energy, the topic of Azerbaijani gas exports also came up, drawing significant interest and even excitement. This attention stems from the fact that Germany itself does not purchase gas directly from Azerbaijan.

Indeed, Germany is not a direct importer of Azerbaijani gas. However, German energy company Uniper is one of the buyers of gas from the Shah Deniz field. Azerbaijani gas, transported via the Southern Gas Corridor (SGC) , reaches Italy, where Uniper operates a power plant that converts the imported gas into electricity. The gas itself does not enter Germany.

The more gas Azerbaijan exports to Italy, the more energy Uniper can generate and transfer to Germany. This dynamic makes increased Azerbaijani gas supplies highly attractive to Germany. Experts believe Azerbaijan has the capacity to meet such demand. For instance, the Absheron-2 project has 5 billion cubic meters of gas available. Moreover, Uniper could source gas not only through Italy but also through Bulgaria and Greece, provided there are opportunities for power generation in those regions.

In April, during a meeting with German Chancellor Olaf Scholz in Berlin , Azerbaijani President Ilham Aliyev stated that by 2027, Azerbaijan aims to increase its gas exports to Europe to 20 billion cubic meters. “Europe’s demand for natural gas—especially from new sources—is growing. While in 2021 we supplied 8 billion cubic meters of gas to EU countries, this year the figure reached 12 billion cubic meters. We are making additional investments and allocating more funds to support European countries in this regard,” he said.

Earlier, the head of Uniper’s office in Azerbaijan, Rashad Guseynli, mentioned that the company’s contract provides for the annual purchase of 1.5 billion cubic meters of gas from Shah Deniz. Negotiations with SOCAR are currently underway to increase these volumes.



In late August, Uniper board member and Chief Commercial Officer Carsten Popping met with Rovshan Najaf, President of SOCAR , in Baku. Earlier in June, Uniper Vice President Michael Gillmer visited Azerbaijan to participate in Baku Energy Week. During plenary discussions on the role of gas supplies amidst the energy crisis, he emphasized the high demand for Azerbaijani gas in Europe. “Although Germany has taken steps toward transitioning to green energy, it also keeps natural gas supplies at the forefront. Following the decision of many European countries, including Germany, to stop importing Russian gas, an energy crisis arose on the continent, with prices surging sevenfold. Therefore, there is a significant demand in Europe for Azerbaijani natural gas,” he said.

Tobias Baumann, Executive Director of the German-Azerbaijani Chamber of Commerce, also highlighted the importance of increasing Azerbaijani gas supplies. According to him, the collaboration between Uniper and SOCAR is highly valuable for transporting gas from Azerbaijan to Germany via the Southern Gas Corridor.

In addition to Uniper, another leading German energy company, VNG, has shown interest in purchasing Azerbaijani gas. Recently, VNG and SOCAR signed a memorandum of understanding to expand cooperation in natural gas and renewable energy. The agreement includes sharing expertise on natural gas supply opportunities and utilizing gas infrastructure. Konstantin Herzog von Oldenburg, Managing Director of VNG Handel & Vertrieb GmbH, expressed hope that the company will eventually sell gas extracted by SOCAR. “We operate in the field of gas imports and wholesale, selling approximately 15-18 billion cubic meters. I’m not referring to gas balance sheets but to physical sales in Germany and neighboring countries. Previously, we imported Russian and Norwegian gas into Germany. This year, we began importing Algerian gas and hope to enhance our portfolio with SOCAR-produced gas in the future,” he said.

Two years ago, Uniper was nationalized by the German government to ensure energy security. As the largest importer of Russian gas, the company faced bankruptcy after Russia halted Nord Stream 1 operations amid the Ukraine war. Berlin declared the acquisition necessary for energy security, as Uniper “is a central pillar of Germany’s energy supply.”

Thus, while Germany does not purchase Azerbaijani gas directly, it still plays a significant role in ensuring the country’s energy security.

(If you possess specialized knowledge and wish to contribute, please reach out to us at opinions@news.az).

News.Az