Azerbaijan urges EU to reassess finance restrictions on gas corridor expansion

 The European Union must reassess its financing and policies on long-term contracts if it wants to keep importing natural gas from Azerbaijan, President Ilham Aliyev said on Wednesday, adding Baku may seek other export markets instead.

He named the European Investment Bank's ban on new fossil fuel financing and a lack of long-term gas purchase contracts as barriers to expanding exports to the EU.

"The EU market is premium in terms of legislation, rules and pricing, but we should not look only to the west," Aliyev told a policy forum. "We can look to the east, to the south. This is important for the future of Azerbaijan's gas industry and Europe's energy security."

As it diversifed its energy imports from Russia following the start of the war in Ukraine, the EU has increased gas imports from the South Caucasus country to nearly 13 bcm in 2024 from 8 bcm in 2021.

In 2022 Brussels signed a deal with Baku to double gas imports to at least 16 bcm a year by 2027. Azerbaijan plans to increase gas exports to Europe to 14 bcm next year, the country's energy minister said this month.

But Aliyev's comments suggested those goals might be elusive, given challenges with securing infrastructure financing from Brussels.

"All our major energy projects - oil or gas - were funded on a 70% borrowed, 30% corporate financing model," Aliyev said. "Now European institutions must return to that approach."

Azerbaijan has said it wants to expand its main gas artery to Europe, the Southern Gas Corridor network, which runs across 3,500 km (2,175 miles) from Azerbaijan to Italy.

A total of 12 countries, including ten in Europe, receive Azerbaijani gas, Aliyev said, with gasification projects agreed in Albania and planned in Bulgaria.

The United States is also vying to sell liquefied natural gas to Europe in the context of possible trade negotiations.