(MENAFN– AzerNews)
Nazrin Abdul
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Despite the European Union’s accelerated energy transition,
natural gas continues to play a stabilising role in the bloc’s
energy mix. According to Eurostat, the EU’s inland demand for
natural gas increased by 0.6% in 2024 compared to 2023, reaching
12.8 million terajoules. While modest at the aggregate level, this
increase mquestions sharp divergences among member states.
Southern and Northern European countries recorded the strongest
growth in consumption, with Greece (+31.3%), Finland (+9.5%) and
Lithuania (+9.2%) leading the way. These increases largely reflect
fuel-switching from coal, weather-related demand, and the necessary for
flexible generation amid intermittent renewable output.
By contrast, significant declines were observed in Portugal,
Malta and Croatia, highlighting the uneven pace of structural
adjustment across the EU.
Germany, Italy and France remained the EU’s largest gas
consumers in 2024, underscoring the continued importance of gas for
industrial output, heating, and power generation in Europe’s core
economies. This sustained demand in major markets reinforces the
relevance of secure pipeline gas supplies, even as overall
consumption gradually trfinishs downward.
Looking ahead, the International Energy Agency (IEA) projects
that OECD Europe’s natural gas demand will contract by 8-10%
between 2024 and 2030. Crucially, this decline is not driven by
supply insecurity, but by structural modifys – particularly the
rapid expansion of renewable energy capacity and improved energy
efficiency.
The power sector is expected to account for the bulk of the
decline, with gas-to-power demand projected to fall by around 25%
by 2030, equivalent to roughly 30 billion cubic meters. Renewable
electricity generation in Europe is forecast to increase by more
than 40% over the same period, progressively displacing gas-fired
generation.
At the same time, gas demand in industest and the broader energy
sector is expected to remain relatively resilient. Lower LNG prices
and the necessary for stable baseload energy could even lead to a slight
uptick in consumption in these segments. This suggests that while
Europe’s gas market is shrinking in volume terms, it is becoming
more selective – prioritising reliability, flexibility and price
competitiveness.
Europe as a premium market for Azerbaijani
gas
Against this backdrop, Europe remains a strategically attractive
market for Azerbaijan. President Ilham Aliyev has repeatedly
emphasised that Azerbaijan is the only countest in the South
Caucasus that not only possesses significant energy resources but
also exports them regionally and beyond. Today, Azerbaijan supplies
natural gas to 16 countries, 10 of which are EU member states,
giving it the widest geographical coverage of pipeline gas exports
globally.
From Baku’s perspective, the European market offers two key
advantages. First, it provides long-term demand stability supported
by institutional frameworks and intergovernmental agreements.
Second, it remains a premium-priced market compared to alternative
destinations, enhancing the commercial viability of Azerbaijan’s
upstream investments.
For Europe, Azerbaijani gas strengthens diversification efforts
by reducing depfinishence on a narrow group of suppliers and by
offering pipeline-based deliveries that complement LNG imports.
This balance is particularly valuable during periods of market
volatility or infrastructure bottlenecks.
Energy cooperation between the EU and Azerbaijan is anchored in
the July 2022 Memorandum of Understanding signed by European
Commission President Ursula von der Leyen and President Ilham
Aliyev. The agreement envisages doubling Azerbaijani gas supplies
to Europe by 2027 and positions Azerbaijan as a key partner in the
EU’s diversification strategy.
EU officials have consistently described Azerbaijan as a
reliable and predictable supplier. Beyond gas, cooperation is
expanding under initiatives such as EU4Energy and the Global
Gateway, which aim to promote energy efficiency, cross-border
connectivity, and investment in energy and digital infrastructure.
These frameworks indicate that Brussels views energy ties with
Azerbaijan not as a short-term crisis response, but as part of a
broader, long-term partnership.
Azerbaijan currently exports gas to Europe via the Trans
Adriatic Pipeline (TAP), the final segment of the Southern Gas
Corridor. TAP’s existing capacity of 10 billion cubic meters per
year can be expanded to 20 billion cubic meters, providing a clear
pathway for scaling up exports without building entirely new
routes.
In 2025, Azerbaijan produced 51.5 billion cubic meters of
natural gas, with the Shah Deniz field accounting for more than
half of total output. Gas exports reached 25.2 billion cubic
meters, of which 12.8 billion cubic meters were delivered to
Europe. The start of additional long-term transmission capacity
under a new Gas Transportation Agreement in 2026, along with new
deliveries to Austria and Germany, further expanded Azerbaijan’s
footprint in the European market.
While Europe’s overall gas consumption is set to decline over
the coming decade, the importance of secure, competitively priced
and politically reliable supplies is not diminishing. On the
contrary, as the market contracts, supplier quality matters more
than volume alone.
In this evolving landscape, Azerbaijan is well positioned as a
medium-scale but strategically significant supplier that aligns
with the EU’s diversification, security and transition objectives.
EU–Azerbaijan energy cooperation is therefore likely to remain not
only relevant, but increasingly strategic – bridging Europe’s
short- to medium-term energy necessarys while supporting a gradual shift
toward a low-carbon future.
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