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Azerbaijan Partners with BP to Meet ‘Green’ Energy Targets

By Nargiz Mammadli February 23, 2021

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Officials in Baku are convinced that the British ‘know-how’ will help build on a strategic partnership within various decarbonization and renewable energy projects.

As officials in fossil-fuel-rich Azerbaijan have been in search of how to tackle some of the world’s most pressing environmental challenges, they are looking to partner with the British oil and gas giant to outline best practices. 

On Monday, Azerbaijan’s Energy Ministry signed a memorandum of understanding (MoU) with BP, to cooperate in assessing the potential and conditions required for large-scale decarbonized and integrated energy and mobility systems, including renewable energy projects in the regions and cities of Azerbaijan. The document was signed by BP’s Regional President for Azerbaijan, Georgia, and Turkey Gary Jones and Parviz Shahbazov, Azerbaijan’s Energy Minister. 

Under the memorandum, the sides will establish a steering committee and a working group, which are supposed to design a master plan for further decarbonization of relevant regions or cities in Azerbaijan. The plan will cover the development of trends for clean energy projects, low-carbon transport, green buildings, waste management, clean industry, natural climate solutions, integrated partnerships, as well as integrated and decarbonized energy and mobility systems.

According to Jones, the document provides a great opportunity for BP to further strengthen its successful partnership with Azerbaijan at a time when the company is working “to significantly scale-up its low-carbon energy business and transform its mobility and convenience offers.”

“BP has recently partnered with the cities of Houston and Aberdeen and by signing this MoU we would like to explore similar partnership opportunities with regions and cities in Azerbaijan to bring integrated energy and mobility solutions including clean energy aimed at driving down emissions,” he said, according to a statement published on the company’s website.

BP’s work with Azerbaijan date back to the early 1990s, when BP opened a representative office in Baku. Over nearly the past three decades, BP has been partnering with Azerbaijan within world-class projects such as Azeri-Chirag-Gunashli (ACG), Shah Deniz, Baku-Tbilisi-Ceyhan (BTC), and Southern Gas Corridor (SGC).

Established in 1909, BP is today considered one of the world’s seven oil and gas “supermajors.” But now major oil companies are moving into alternatives and BP is no exception. Last year, the company introduced a new strategy that is supposed to reshape its business. Within the decade, BP aims to increase its annual low carbon investment ten-fold to around $5 billion a year and develop around 50GW of net renewable generating capacity by 2030. At the same time, the company aims for emissions from its operations and those associated with the carbon in its upstream oil and gas production to be lower by 30-35 percent and 35-40 percent, respectively.

Officials in Baku are convinced that the British ‘know-how’ will help build on a strategic partnership within various decarbonization and renewable energy projects.

“I do hope that we will achieve shared success with BP while transforming to modern energy trends stemming from global climate challenges,” minister Shahbazov said.

Despite having vast oil and natural gas reserves, Baku has been interested in developing clean, or ‘green’, energy. 

In 2016, Azerbaijan signed on to the Paris Agreement, aimed at regulating measures to reduce carbon dioxide emissions in the atmosphere. Under the agreement, Azerbaijan pledged to reduce greenhouse gas emissions by 35 percent by 2030, creating a clean environment and increasing the share of green energy in production and consumption.

At the moment, the country is developing its long-term energy strategy, which will cover the period until 2050.

The government of Azerbaijan strongly supports the development of the renewable energy sector, especially the creation of green energy zones. Foreign and local investors are invited to the process of providing Azerbaijan with long-term, sustainable, affordable, and environmentally friendly energy sources.

Last year, two multi-million dollar deals for building solar and wind power stations were signed with Saudi Arabia’s ACWA Power energy company and Masdar Company from the United Arab Emirates. The investments combined stand at $400 million, while the stations will together generate 440 megawatts (MW) of electricity for Azerbaijan. ACWA Power is also scheduled to build a 240 MW wind station in the Khizi region, the windiest region in Azerbaijan located north of Baku. Meanwhile, Masdar will break the ground for a 200 MW photovoltaic farm near the Alat settlement located along the Caspian Sea. 

In its report titled “Support for the Implementation of Renewable Energy Auctions in Azerbaijan,” the European Bank for Reconstruction and Development (EBRD) mentioned that Azerbaijan has strong potential for renewable energy development. 

According to the document, the Absheron peninsula, the coastal areas along the Caspian Sea, as well as the Caspian basin, the Nakhchivan Autonomous Republic, and Baku are considered to be suitable for developing wind energy projects. At the same time, Baku, Kur-Araz lowland, Absheron Peninsula, and the Nakhchivan Autonomous Republic are considered to be suitable for developing solar power projects. 

In 2019, about 7.3 percent of total electricity generation in Azerbaijan was from renewable energy sources, according to data compiled by the country’s energy ministry.