Azerbaijan says 'God-given' oil and gas will help it go green

Flames soar into the air from a sandstone outcrop on a hillside of the Absheron peninsula near Baku, the capital of Azerbaijan, as it prepares to host the COP29 climate conference.

The “burning mountain” — Yanardag in Azerbaijani — is fed by underground gas rising to the surface and ignited upon contact with oxygen.

The abundance of naturally occurring fires from the energy-rich nation’s huge gas deposits has earned it the nickname “The Land of Fire”.

Azerbaijan’s vast oil and gas resources “have shaped the history, culture, politics, and the economy” of the Caspian nation, said energy expert Kamalya Mustafayeva.

Azerbaijan’s oil deposits — 7 billion barrels of proven reserves — were discovered in the mid-19th century, making what was then part of the Russian Empire one of the first places in the world to start commercial oil production.

“The world’s first industrial onshore oil well was drilled in Azerbaijan, and also the first offshore one,” Ashraf Shikhaliyev, the director of energy ministry’s international cooperation department, told AFP.

Since gaining independence from the Soviet Union in 1991, Azerbaijan has produced 1.05 billion tonnes of oil and is set to increase its natural gas production from 37 billion cubic metres (bcm) this year to 49 bcm over the next decade, according to official figures.

Revenues from oil and gas production make up about 35 per cent of the country’s GDP and nearly half of the state budget.

“Azerbaijan’s oil revenues — up to $200 billion to date since 1991 — gave the country an opportunity to make a huge leap forward,” said Sabit Bagirov, who headed the State Oil Company of Azerbaijan in the 1990s.

“Baku, once a small fishermen’s hamlet of some 4,000 people, was born of an oil boom,” which led to a massive population growth — at a faster rate from the 1890s than London, Paris, or New York — said energy expert Ilham Shaban.

Modern Baku is a bustling metropolis dotted with skyscrapers, seaside promenades, and futuristic buildings designed by world-renowned architects.

The Azerbaijani capital has become a venue for major international events, such as the 2012 Eurovision Song Contest, matches in the Euro 2020 football championship, and the Formula 1 motor racing Grand Prix.

The manna of petrodollars helped Azerbaijan to arm itself against Armenia, and last year Baku recaptured its breakaway Nagorno-Karabakh region from Armenian separatists who had controlled it for decades.

About 75 per cent of Azerbaijan’s energy exports go to European markets.

In 2022, the European Commission — keen to reduce Europe’s dependence on Russian gas — signed a deal with Baku to double gas imports from the country.

While Azerbaijan’s share of gas supplies to Europe might only reach five percent by 2033, the country can meet all the gas needs of Bulgaria, Greece, Serbia, Albania, and the south of Italy, said Bagirov.

“Azerbaijan has become an important factor in ensuring Europe’s energy security,” said expert Mustafayeva.

Shikhaliyev listed “clean energy mega projects” such as transforming the newly-recaptured Nagorno-Karabakh region into a “green energy zone” fully reliant on solar, wind and hydro power.