Page 38 - Caucasus Outlook 2025

toward a diversified and sustainable energy future.
In the oil sector, production totalled 26.6mn tonnes, marking a 4.1% y/y decline, while commodity oil production fell 3.9% to 26.5mn tonnes. Despite these setbacks, the Baku-Tbilisi-Ceyhan (BTC) pipeline maintained its position as the primary export route, transporting 26.8mn tonnes of oil, accounting for 75.9% of total oil transmission. Gas production, in contrast, rose 4.1% to 46 bcm, with commodity gas output climbing by 5.9% to 35.1 bcm. The Baku-Tbilisi-Erzurum South Caucasus Pipeline handled 57.2% of total gas transported, delivering 20.8 bcm and achieving 4.3% y/y growth.
Investments in the oil and gas sector totalled AZN5.1bn ($3.0bn), representing a 9% decline from the same period in 2023, reflecting cautious capital allocation amidst shifting global energy trends. Additionally, Azerbaijan’s flagship Shah Deniz-2 gas-condensate field continued steady production, with cumulative output reaching 66.6 bcm of gas and 11.5mn tonnes of condensate since operations began in 2018.
The power sector showed mixed performance. Total electricity production reached 25.9bn kWh over the first 11 months of 2024. TPPs accounted for the majority, producing 22.4bn kWh, while hydropower plants generated 2.8bn kWh. Other sources, including waste-to-energy facilities, contributed 799.7mn kWh. Notably, renewable energy demonstrated impressive growth, increasing by over 80% y/y to 3.58bn kWh, which now represents 13.8% of the country’s total electricity generation. Solar power plants produced 540.1mn kWh, while wind farms generated 48.6mn kWh. Additionally, waste-to-energy facilities processed solid household waste to produce 211mn kWh of electricity.
Azerbaijan’s renewable energy sector is central to its energy strategy, supported by its vast potential of 135 GW onshore and 157 GW offshore. By 2030, the country aims to achieve a renewable energy capacity of 6 GW, contributing to its target of reaching a 30% share of green energy in total electricity generation within the next five years and reducing carbon emissions by 40% by 2050. Key projects, backed by international energy companies, reflect Azerbaijan’s growing role in the green energy transition. Recent developments include the commissioning of the 240 MW Khizi-Absheron Wind Power Plant by ACWA Power by late 2025 and the completion of the 230-MW Garadagh Solar Power Plant by UAE’s Masdar. Masdar also leads the construction of several solar and wind projects, including a 315-MW plant in Neftchala and a 445-MW facility in Bilasuvar.
Notably, Nobel Energy is leading solar initiatives with plants in Jabrayil and Nakhchivan, while BP is partnering on the Shafag solar project. These projects demonstrate Azerbaijan's commitment to sustainability and position the country as a regional leader in green energy. While oil and gas remain vital to Azerbaijan's economy, the growth in renewable
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