For some time, Azerbaijan has been seen as one of Brussels’ allies in its efforts to diversify energy imports. However, the situation appears to have stalled, with multiple factors converging to limit the participation of Azeri gas in the European energy mix. In this article, we assess the potential of this partnership.
The grand plans
With natural gas reserves estimated at 2.5–2.6 billion cubic metres (bcm) https://www.iea.org/reports/azerbaijan-energy-profile/energy-security by the EIA, Azerbaijan could play a significant role in diversifying Europe’s energy imports. In fact, Brussels and Baku signed a memorandum of understanding in 2022, calling for gas supplies to be doubled by 2027. Therefore, the volumes should have exceeded 16 bcm. However, this goal seems unrealistic for now, as Azerbaijan only supplied 11.7 bcm in 2024, according to Eurostat https://www.consilium.europa.eu/en/infographics/where-does-the-eu-s-gas-come-from/#0 Nevertheless, Azerbaijan is one of Europe’s top energy suppliers, accounting for 4.3% of gas supplies (7th place in 2024).
Azeri natural gas is transported to Europe mostly by pipelines. The Southern Gas Corridor was fully inaugurated in 2020. This network includes the South Caucasus Pipeline (SCP), the Trans-Anatolian Natural Gas Pipeline (TANAP) through Turkey and the Trans-Adriatic Pipeline (TAP) from Greece to Italy.
To achieve the planned increase in gas transport, the capacity of the pipelines was supposed to increase from 10 to 20 bcm per annum in accordance with the MoU.
The LNG factor
Starting from 2022, in response to Russia’s gas cutoff and aggression in Ukraine, the EU reduced Russian pipeline imports from almost 40% of its supply in 2021 to just 11% in 2024. This gap was largely filled by a surge in LNG deliveries.
EU officials https://www.consilium.europa.eu/en/infographics/where-does-the-eu-s-gas-come-from/#:~:text=than%2019,gas%20imports%20in%202024 have highlighted that the diversification of gas imports away from Russia ‘was made possible mainly thanks to a sharp increase in LNG imports’ and reduced gas consumption. These two pillars of the current EU energy policy are intended to be maintained in order to meet the EU’s climate goals of reaching carbon neutrality by 2050.
The EU is now the world’s largest LNG importer. In 2024, the EU imported over 100 billion cubic metres (bcm) of LNG, with the USA accounting for around 45% of this volume. US LNG exports to Europe more than doubled from 18.9 bcm in 2021 to 45.1 bcm in 2024, making the US the EU’s second-largest gas supplier with a market share of around 16.5% https://www.consilium.europa.eu/en/infographics/where-does-the-eu-s-gas-come-from/#0.
Large volumes call for large infrastructure solutions. New LNG terminals have started to appear all across the European coastline, pulling resources away from other infrastructure projects.
Drop in gas demand
Another reason to doubt the feasibility of Azerbaijan increasing its gas exports is the drop in demand from the EU. Between 2021 and 2024, gas consumption in Europe fell by around 19%. Analyst Yana Zabanova notes https://www.boell.de/en/2024/11/05/eu-and-azerbaijan-energy-partners-short-term-benefits-uncertain-future that EU gas demand started declining in 2022 due to lower industrial consumption, efficiency gains, and faster deployment of renewables. She also believes that EU climate goals will continue to put downward pressure on gas imports.
Has Europe Outgrown Azeri Gas?
Meanwhile, in Baku, officials have scaled back their ambitions in the face of technical, market and political constraints on export growth.
Azerbaijan’s exports to the EU have remained at around 12–13 bcm for the past three years. Furthermore, exports declined in 2025 https://www.bruegel.org/dataset/european-natural-gas-imports, according to Bruegel, a Brussels-based think tank. In the first quarter of 2025, exports stood at 2.84 bcm, down from 3.2 bcm in Q1 of 2024. By the end of 2024, exports to the EU had reached only 12.7 bcm, a slight increase from 12.4 bcm in 2023.
In light of this, the operators of the Trans-Adriatic Pipeline (TAP) – the final leg of the Southern Gas Corridor to Italy – are not in a hurry to increase the pipeline’s capacity. TAP currently has a capacity of 10 bcm per year; however, with additional compressor stations, this could be increased to 20 bcm. Stage 1 of TAP’s expansion (adding 1.2 bcm of capacity by 2026) is underway, increasing TAP’s capacity to 11–12 bcm. However, the larger Stage 2 expansion to 20 bcm remains uncertain. This depends on a binding market test for shippers to book long-term capacity. So far, however, firm commitments have been limited. Yana Zabanova concluded https://www.boell.de/en/2024/11/05/eu-and-azerbaijan-energy-partners-short-term-benefits-uncertain-future that ‘Azerbaijan is an important but by no means an indispensable energy supplier for Europe’
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Internal issues
In fact, Azerbaijan is also having trouble with its end of the deal. Its gas output is only expected to rise marginally, if at all. The Umid-Babek project was intended to be Baku’s next major gas source after Shah Deniz. However, the complexity of the upstream process meant that SOCAR (Azerbaijan’s state oil company) had to call for a tender to find a foreign partner with more advanced technical capabilities. However, since 2014, upstream companies have shown little interest. Without outside investment and technology, progress on the Babek field has been minimal – no production sharing contract (PSC) has yet been agreed.
As for Umid, the gas it is currently producing is being used domestically rather than being exported. In September 2024, SOCAR’s president, Rovshan Najaf, emphasised https://www.upstreamonline.com/field-development/offshore-well-boosts-azerbaijan-s-gas-export-ambitions/2-1-1707270 that all gas from the Umid field would be supplied to the local market, thereby freeing up other sources (such as the stagnating Shah Deniz field) for export. Absheron, which is operated by TotalEnergies and SOCAR in a 50/50 partnership, is also considered essential for meeting domestic energy needs.
This reflects Azerbaijan’s rising domestic gas consumption. S&P Global forecasts that Azerbaijan must consider its own domestic demand and the equivalent volume supplied from other sources to reach 15 bcm by 2030, up 25% from 2022. The official view is that Azerbaijan must first meet its own demand, leaving less for Europe.
The overall picture is also forcing European companies to hold back. French company TotalEnergies is in no hurry to reach its peak output of 7 billion cubic metres (bcm) on the Absheron field because demand prospects outside Azerbaijan are uncertain.
Even Shah Deniz, Azerbaijan’s giant gas field which underpins all exports to Europe, is on hold. In June 2025, BP and its partners approved the Shah Deniz Compression (SDC) project, which involves adding an offshore compression platform to sustain a gas flow of 50 bcm from an existing reservoir. The goal is to maximise recovery and extend production on the Shah Deniz well into the 2030s. However, the future of the project is uncertain. The new compression platform will not be fully operational until 2029. By that time, EU gas consumption is projected to be lower and stricter climate policies will be in place. Furthermore, Russia’s Lukoil and Iran’s NICO hold shares in the project — 19.9% and 10%, respectively. Both Lukoil and NICO are subject to various sanctions, making Shah Deniz a less desirable source for European markets.
This suggests that Azerbaijani gas will remain part of Europe’s energy puzzle, albeit a smaller part than was once hoped.