Baku, December 14, AZERTAC

“Over the past decade, Italian companies have invested more than €1 billion in Azerbaijan’s economy, primarily in the energy sector, but also in agriculture, construction, renewable energy projects, and infrastructure. Italian businesses have also shown significant interest in projects within the Alat Free Economic Zone,” said Domenico Nocerino, Italian expert on international relations, Director of the Geopolitics magazine Opinio Juris, as he shared insights on the trade relations between Azerbaijan and Italy.

AZERTAC presents his interview on this topic.

- How have economic relations between Azerbaijan and Italy changed in recent years?

- In recent years, economic relations between Azerbaijan and Italy have intensified and diversified, with growing interest in strategic sectors such as energy, infrastructure, and renewables, driven by geopolitical challenges and opportunities for bilateral cooperation. The future of economic relations looks promising, with both countries committed to expanding cooperation in several strategic areas. The Southern Gas Corridor will remain a cornerstone of their energy partnership, while Italy’s role in helping Azerbaijan diversify its economy away from oil and gas could become even more significant. As Azerbaijan continues to modernize its economy, Italian companies in sectors like technology, infrastructure, and manufacturing are likely to play a growing role.

In conclusion, the economic relationship between Azerbaijan and Italy has become more diversified and robust in recent years, moving beyond traditional energy cooperation to encompass a wide array of sectors. Both countries are poised to benefit from this enhanced partnership as they work together to address global challenges such as energy transition, economic diversification, and sustainable development.

- What role does Italy as a consumer see in Azerbaijani gas?

- Italy is one of the main importers of natural gas from Azerbaijan. Azerbaijan is Italy’s top supplier of oil and its third-largest supplier of gas. The Southern Gas Corridor and the Trans Adriatic Pipeline (TAP), which transports Azerbaijani gas from the Shah Deniz field in the Caspian Sea directly to Europe, are significant factors in strengthening bilateral energy cooperation. Currently, the pipeline’s capacity is 10 billion cubic meters (bcm), but it can be increased to 20 bcm. TAP presently meets about 10% of Italy’s gas needs. With the anticipated increase in gas volumes supplied to Europe following agreements with the European Union, the gas delivered to Italy via TAP is expected to double.

- What are the possibilities to expand ties between the two countries also in the field of renewable energy?

- Baku and Rome are already collaborating in the field of renewable energy. Companies from both countries have agreements to work on “green” projects using thermochemical treatment technology. The Azerbaijani government has proposed an initiative to increase the number of Italian-Azerbaijani joint ventures.

Italian energy companies are renowned for their expertise in environmental issues and renewable energy. Closer cooperation could facilitate the development of mutually beneficial projects in wind energy (including offshore), solar, and geothermal energy. Renewable energy represents a new frontier for collaboration. Azerbaijan has launched plans to diversify its economy and develop clean energy, and Italian companies, with their expertise, could contribute to solar and wind power, green hydrogen, and energy efficiency initiatives.

- How could Italian companies be involved in stimulating the economy of the Karabakh region? Which economic sectors in the liberated territories of Azerbaijan are most attractive to Italian investors?

- However, Italian companies could show interest in sectors such as infrastructure, agriculture, and the protection and preservation of cultural and religious heritage.

- What are the main areas of cooperation between Italy and Azerbaijan in the trade and economic sphere? Which areas are likely to develop in the coming years?

- Italy is already Azerbaijan’s leading trade partner, largely due to energy imports. Over the past decade, Italian companies have invested more than €1 billion in Azerbaijan’s economy, primarily in the energy sector, but also in agriculture, construction, renewable energy projects, and infrastructure. Italian businesses have also shown significant interest in projects within the Alat Free Economic Zone. To further support Europe, Azerbaijan could: expand TAP’s capacity, collaborating with European partners to increase the pipeline’s current limit of 10 bcm per year; develop green energy projects (such as green hydrogen) for export to Europe, and engage in multilateral platforms to ensure stability and reliable energy flows. As mentioned, TAP represents a critical source of energy supply. In 2023, Italy received about 10 bcm of gas from Azerbaijan via TAP. In the future, this collaboration could expand with the development of infrastructure related to energy transport and storage.

- What is the current level of investment by Italian companies in the non-oil sector of the Azerbaijani economy?

- Italian companies are increasingly active in Azerbaijan’s non-oil sectors, particularly in manufacturing, agriculture, and food production. There are also efforts to support the country’s growing tourism industry.