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Wednesday June 19 2024

Azerbaijan-Saudi Arabia forge strong economic ties with renewables focus

2 May 2024 08:30 (UTC+04:00)
Azerbaijan-Saudi Arabia forge strong economic ties with renewables focus

By Nazrin Abdul, AZERNEWS

In recent years, the economic ties between Azerbaijan and Saudi Arabia have flourished, extending beyond the realm of traditional oil and gas industries. The collaboration between the two nations has expanded into renewable energy, marking a significant milestone in their bilateral relations.

One of the focal points uniting Azerbaijan and Saudi Arabia is their joint commitment to addressing global climate challenges. This commitment takes center stage with Azerbaijan hosting the upcoming COP29 event, underscoring the mutual interest in renewable energy production and the development of sustainable energy sectors.

A key player in this collaboration is "ACWA Power," a leading Saudi Arabian company specializing in renewable energy. Currently, ACWA Power is undertaking a groundbreaking project in Azerbaijan, constructing a 240 MW wind power plant. This initiative stems from a Memorandum of Understanding signed in 2022 between Azerbaijan's Ministry of Energy and ACWA Power, focusing on offshore wind energy cooperation.

Highlighting the significance of this partnership, a ceremony was held on January 13, 2022, attended by the President of Azerbaijan, Ilham Aliyev, and Saudi Arabia's Minister of Energy, Prince Abdul Aziz bin Salman Al-Saud, to mark the commencement of the "Khizi-Absheron" Wind Power Plant project. Once operational in 2025, this plant will be Azerbaijan's largest renewable energy facility, capable of producing one billion kilowatt-hours of electricity annually, thereby reducing carbon emissions and preserving natural resources.

The collaborative efforts extend beyond energy production. In April 2024, Azerbaijan's Minister of Economy, Mikayil Jabbarov, engaged in discussions with Amin Nasser, President, and CEO of "Saudi Aramco," Saudi Arabia's national oil company. The talks explored investment opportunities in Azerbaijan's energy sector and potential joint ventures.

Moreover, agreements on green fertilizers and renewable energy projects were signed between Azerbaijan's State Oil Company (SOCAR) and ACWA Power, further solidifying the commitment to sustainable development. As part of the Southern Gas Corridor Consultative Council, SOCAR and ACWA Power penned an agreement in 2023 to collaborate on wind, solar, and green hydrogen projects in Azerbaijan.

SOCAR has set ambitious targets, aiming to increase the share of renewable energy sources in electricity generation capacity to 30 percent by 2030, with a concurrent reduction of greenhouse gas emissions by 40 percent by 2050. These goals align with the broader agenda of promoting sustainable economic development and reducing environmental impact.

Looking ahead, the collaboration between Azerbaijan and Saudi Arabia holds promise for future endeavors, including wind power and seawater desalination projects. The exploration of alternative energy sources and potential green energy initiatives signifies a long-term commitment to environmental stewardship and economic prosperity.

In continuation of fostering economic ties, representatives from Azerbaijan's Export and Investment Promotion Agency (AZPROMO) embarked on a business trip to Saudi Arabia in April 2024. Meetings were held with various institutions in Riyadh, culminating in discussions with the Islamic Chamber of Commerce and Development (ICCD) to explore avenues for joint ventures and partnerships.

As Azerbaijan and Saudi Arabia deepen their economic cooperation, the pursuit of renewable energy projects emerges as a cornerstone of their shared vision for a sustainable future.

During the gathering of the Azerbaijan-Saudi Arabia Joint Business Council, discussions revolved around the export capabilities of both nations and business as well as investment prospects within recently liberated Azerbaijani territories.

The 4th meeting was held in Riyadh under the organization of the Small and Medium Business Development Agency (KOBİA) of Azerbaijan and the Federation of Saudi Chambers. Topics covered included discussions on bilateral export potential, investment opportunities in recently liberated Azerbaijani regions, avenues for enhancing cooperation between business communities in trade and investment, joint initiatives and projects, bolstering the role of the Azerbaijan-Saudi Arabia Joint Business Council in these domains, and amplifying the contribution of SMEs to investment promotion.

The Azerbaijan-Saudi Arabia Joint Business Council was established in December 2022 under the Agreement signed between SMBDA and the Federation of Chambers of Saudi Arabia. The Azerbaijan-Saudi Arabia Joint Business Council, which will be represented by businesspersons from both countries, will support entrepreneurs' initiatives, help to establish direct ties between them, organize mutual visits, meetings and various events, and exchange information between businessmen.

A Deepening Alliance Beyond Energy

The longstanding cooperation between Azerbaijan and Saudi Arabia extends far beyond the realms of energy, encompassing economic, investment, and cultural ties. Central to this collaboration is their joint participation in the OPEC+ format, where both nations have played pivotal roles in stabilizing the global oil market.

Since the inception of the OPEC+ format, Saudi Arabia and Azerbaijan have worked closely together to reconcile supply and demand in the world oil market, fostering stability through years of concerted efforts.

Moreover, Azerbaijan has emerged as an attractive destination for Saudi Arabian investment, thanks to its conducive business environment and robust legal framework that ensures the protection of foreign investments. The country's recent energy sector reforms and overall development trajectory, coupled with its stability and security, further bolster its appeal to investors.

Beyond economic cooperation, Azerbaijan and Saudi Arabia share vibrant ties in tourism, underpinned by their cultural and religious affinities. Azerbaijan's favorable climate, scenic landscapes, and cultural richness attract a growing number of tourists from Saudi Arabia each year. Notably, in the first two months of 2024, Saudi Arabian citizens accounted for 3.4 percent of the total tourists visiting Azerbaijan, reflecting the strengthening tourism links between the two nations.

The historic visit of National Leader Heydar Aliyev to the Kingdom of Saudi Arabia in July 1994 marked a turning point in the comprehensive development of bilateral relations. Since then, the ties between Azerbaijan and Saudi Arabia have continued to deepen, with Azerbaijan prioritizing bilateral and multilateral relations with Arab countries, rooted in shared religious and cultural heritage.

The Kingdom of Saudi Arabia holds a special place in Azerbaijan's diplomatic engagements, given its prominence in the Islamic and Arab worlds. The enduring bond between Azerbaijan and Saudi Arabia underscores a commitment to mutual prosperity and solidarity within the broader Muslim community and beyond. As these relations evolve, both nations look forward to further enhancing cooperation across various sectors for the benefit of their citizens and the wider region.

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