TRUE ROCK 'N' ROLL

After the inauguration of the Interconnector Greece-Bulgaria (IGB) in Sofia this October and talks with the leaders of Albania and Serbia in Tirana and Belgrade, President Ilham Aliyev made yet another historic visit—this time to Romania on December 17. The trip to Bucharest will go down in history for the signing of a quadrilateral agreement to develop one of the most ambitious projects—a 1,000MW, 1,195km-long submarine electric cable Black Sea Energy, which could become a new energy source for the European Union.

The document was in fact a continuation of the memorandum signed between Azerbaijan and the EU on a strategic energy partnership. The implementation of this agreement will make it possible for the EU to increase its own energy security and to get rid of energy dependence on Russia.

As a team

Agreement on Strategic Partnership for the Development and Transfer of Green Energy was signed on December 17 at the Kotroceni Palace by President Ilham Aliyev of Azerbaijan and Prime Ministers Irakli Garibashvili of Georgia, Nicolae Ciucă of Romania and Viktor Orban of Hungary. The signing ceremony was also attended by the President of the European Commission, Ursula von der Leyen.

"Today we are starting the construction of another energy bridge from Azerbaijan to Europe. Our country plans to become an important supplier of electricity to Europe, mainly green energy," Ilham Aliyev said at a meeting dedicated to the signing of the agreement.        

He emphasised that the implementation of this document would be a common contribution to European energy security. "In order to achieve our goals, we must work effectively. Azerbaijan, Georgia, Hungary, Romania should work as a team in close cooperation and coordination with the European Union", Ilham Aliyev said.

Ursula von der Leyen believes that the agreement will bring the EU closer to its partners in the South Caucasus and help the two regions achieve the transition to clean energy.

"To integrate an increasing share of renewable energy, we need strong electricity interconnectors. This is why the transmission line to be laid under the Black Sea between Romania, Georgia and Azerbaijan is extremely important. All I can say is: what an ambitious project. It will connect us on both sides of the Black Sea and will go further towards the Caspian Sea - both for digital communication and for energy," Leyen said.

The EU believes that the project will create an opportunity for Georgia to become an energy gateway to the region, as well as enabling the supply of electricity to neighbouring countries such as Moldova and Ukraine.

"The Black Sea power cable is a new transmission route full of possibilities. As Russia started its military campaign in Ukraine, we decided to abandon fossil fuels from the Russian Federation and diversify towards reliable energy partners, and it's working. (...) But it is not only about a new geopolitical situation. It is also about creating clean, affordable and reliable energy sources, which means various types of renewable energy," Ursula von der Leyen said referring to the importance of the Black Sea Energy.

Romanian President Klaus Iohannis said that the document lays the foundation for long-term cooperation between the participating countries in a number of important sectors.

Underlining that there was still much to be done in the future, the Romanian leader said that in addition to the power cable, there were also plans to lay a digital cable along the submarine power line in the next phase of cooperation. "Maritime transport connection is expected to be extended from Constanta in Romania towards Georgia. These efforts will strengthen the connections with Azerbaijan and later with Central Asia. We have a lot of work to do to use the existing potential and strengthen our resilience," President Iohannis said.

Georgian authorities called the construction of the submarine power transmission cable a Project of the Century, which would increase Georgia's energy independence and the country's economic importance. Georgian Prime Minister Irakli Garibashvili pointed to the importance of diversifying supplies to address the challenging issues of energy security amid current geopolitical challenges.

Perhaps the Hungarian Prime Minister Viktor Orban, who called the project a ‘true rock 'n' roll’ would receive a personal award for the best comparison, had there been one. "There is a source of energy in the Caspian Sea region. We are now preparing to build the world's longest underwater power line. This is a real innovation. If I were 30 years younger, I would say that this is a true rock ‘n’ roll," said Orban, adding that Budapest was proud to take responsibility for such a unique investment.

Process launched

What does the signing of the Black Sea Energy agreement promise? In short, the quadrilateral inter-governmental agreement creates the financial and technical foundation for the construction of the submarine cable project. It is designed to bring electricity generated in Azerbaijan through Georgia and the Black Sea to Romania for onward transmission to Hungary and the rest of Europe.

The project has now moved to the stage of feasibility study to be completed in September 2023. It will take three to four years to build the cable.

Hungarian Foreign Minister Peter Szijjarto said the European Commission had allocated €2.3 billion for a cable that would be the longest in the world, and Azerbaijan was inviting investors to build turbines in the Caspian Sea.

With regard to green energy sources for the successful operation of the submarine system, Azerbaijan has sufficient capacity to meet the necessary needs. However, there is a lot of work to be done to create capacities for renewable energy (RE) generation. The process has already started, with the solar and wind power plants being built and concrete results expected in the coming years.

"Together with one of our country's strategic investors, we plan to produce 3GW of wind power and 1GW of solar power by 2027. Eighty per cent of this energy will be exported. By 2037, we plan to create at least 6GW of additional capacity. Thus, a single global energy company plans to invest into the generation of 10GW of green energy in Azerbaijan," President Ilham Aliyev said during the meeting with his colleagues in Bucharest.

Although Azerbaijan has historically been known as an oil and gas rich country, there are good prospects to become an active participant in greening the economy and industry through both its renewable energy potential and strategic position along the supply route of green energy to Europe. For example, Azerbaijan's renewable energy potential is over 27GW thanks to onshore wind and solar facilities and 157GW of wind power in the Azerbaijani sector of the Caspian Sea.

Plus natural gas

Apart from signing the Black Sea Energy agreement, Romania can also benefit from a successful gas deal with Azerbaijan. On the same day when President Aliyev visited Bucharest, SNGN Romgaz S.A. and SOCAR Trading (subsidiaries of SOCAR and Romgaz S.A.) concluded a contract to supply Azerbaijani gas to Romania starting as early as on January 1, 2023.

The gas will be delivered through the Southern Gas Corridor (SGC), IGB, and the gas transmission infrastructure of Bulgaria and Romania.

According to ICIS (Independent Commodity Intelligence Services), thanks to the signed spot short-term contract SOCAR will supply Romania with up to 300 million cubic metres (mcm) of gas in January-April 2023. The daily volume is expected to be up to 4.2mcm of gas.

President Ilham Aliyev said that Azerbaijan was expanding the geography of its gas supplies to Europe, which was beneficial to both sides. "This is a win-win situation, as Europe needs to strengthen its energy security, and Azerbaijan needs a reliable market for the huge volume of its energy resources," Mr. Aliyev said.

Romania will gain access to Azerbaijani gas to cover its domestic needs, which is especially important in winter and amid the ongoing energy crisis in Europe.

"The contract serves the strategic goals of securing natural gas supplies and diversifying sources. The parties plan to continue cooperation and improve the mechanisms for supply of Azerbaijani natural gas to the Romanian market," the Romanian company said in a press release.

Thus, an interesting format of energy cooperation is emerging with Romania, which promises to be long-term and efficient, covering both traditional fuel and clean energy supplies in the long term.

And plus Serbia

Like Romania, Serbia is also interested to have both Azerbaijani gas and electricity. Serbian President Vucic underlined the significance of the Black Sea submarine cable expected to supply the Azerbaijani electricity.

Expansion of energy cooperation between Baku and Belgrade was high on the agenda during a meeting between the two leaders held in Baku on December 21 as part of a return visit by Vucic.

"We have already discussed the ways of building and developing our transmission systems to receive electricity, which will be transported through a submarine line to Romania and Hungary, and see if we can become energy beneficiaries. We have discussed ways of getting Azerbaijani gas through the interconnector that we are preparing to build together with Bulgaria and Northern Macedonia," Vucic said after his talks with Ilham Aliyev.

President Aliyev replied that the energy sector was part of the cooperation between Baku and Belgrade.

"This area has become more significant recently. Azerbaijan already exports its natural resources in various directions, including to the European continent, including to the neighbours of Serbia. There are opportunities for cooperation both in terms of natural gas and electricity. We have held relevant talks in this regard. I am sure that starting next year we will take practical steps to export Azerbaijani electric power to Serbia," President Aliyev said.

As for the Azerbaijani gas imports, Serbian authorities are waiting for the completion of the interconnector with Bulgaria in 2023, which would allow Serbia become a transit country for other European countries and to meet its own needs.

"This will make it possible for Serbia to actually become part of the SGC, which for us means more gas volumes, more security of supply, more independence," Serbian Minister of Mines and Energy Dubravka Đedovic believes.

She also said that through a joint working group the energy companies of Serbia and Azerbaijan would agree on the next steps with regard to contracting the amount of gas Serbia will import from Azerbaijan.

In addition to Serbia, several EU countries have lined up for Azerbaijani gas, as the diversification of energy supplies has become even more urgent for them amid the Russian-Ukrainian conflict.

Azerbaijan’s course to develop green energy is absolutely correct. The world is slowly but surely turning away from fossil fuels and the transition to post-fossil energy is inevitable. Therefore, Azerbaijan must get in the race now. It is necessary to acquire production and export capacities in order to occupy a niche in this market.