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Azerbaijan’s state oil and gas company is planning to increase new production of fossil fuels at the same time as Baku pushes other countries for climate action as host of the UN COP29 summit starting this week, new analysis shows.
Forty-four per cent of Socar’s production will be new oil and gas by 2050, the second highest of any national oil company in the world, according to a report by campaign group Global Witness based on analysis of data from independent consultancy Rystad Energy. It examined how much production was expected to come from existing developments versus discovered fields that were yet to be developed, as well as undiscovered oil and gas.
The International Energy Agency said in 2023 there should be no new long-lead-time upstream oil and gas projects if the world were to limit the average global temperature rise to 1.5C above pre-industrial levels, in line with the ideal limit of the landmark Paris agreement.
Socar has boosted production since the war in Ukraine as the EU seeks to swap Russian gas for fossil fuels from other countries including Azerbaijan, which will host COP29 for two weeks from Monday.
The president of COP29, Mukhtar Babayev, has led the call for the world to limit the rise in global temperatures to 1.5C, even as Socar is securing deals to produce new oil and gas beyond 2050.
Last year, almost 200 countries agreed to transition away from fossil fuels in global energy systems by mid-century at COP28 in Dubai.
However, Azerbaijan has struck a series of oil and gas agreements since being designated the COP29 host country, according to the analysis.
This includes a $468mn acquisition of stakes in gas projects in the UAE, Socar’s first international upstream oil and gas production investment.
“Azerbaijan is a strategic supplier of natural gas to Europe and is investing in capacity in response to a European request to increase supplies following supply disruptions in 2022,” a COP29 spokesperson said. It was also “seeking to expand exports of renewable energy to meet demand in the immediate region and in Europe”.
Socar did not respond to a request for comment.
The eastern Caucasian country is the second petrostate in a row to host the world’s most important climate summit. Ahead of COP28, the UAE also faced claims it was attempting to strike oil and gas deals as it simultaneously played host.
“The perfidiousness and hypocrisy of the global fossil fuel industry, after decades of practice, is becoming even more brazen,” said Richard Kinley, former executive secretary of the UN’s climate change arm.
He added: “It is deeply troubling that they appear to have been unable even to draw a ‘cordon sanitaire’ around their COP presidency to avoid its contamination by fossil fuel interests.”
Lars Aagaard, the Danish climate minister, who will attend COP29, said Azerbaijan was not only focused on increasing its gas revenues. Denmark was in talks with Baku on renewable power with the wind company Ørsted, which is also attending the summit, he said.
But European diplomats told the Financial Times that Azerbaijani government officials had raised the question of gas deals alongside climate talks, mostly in the context of replacing volumes presently coming through Ukraine from Russia under a contract that will expire at the end of this year.
Companies in Hungary and Slovakia are approaching a deal with Azerbaijan to replace the gas coming through the Ukrainian pipeline, Bloomberg reported last month. But energy analysts have warned that the deal could end up simply disguising continued Russian flows.
A Chatham House report last month noted Azerbaijan’s efforts to petition the EU to lock in guarantees for gas demand into the future.
“By inserting itself at the centre of the multilateral climate process, Azerbaijan’s government may hope to control conversations around the global energy transition so that the country’s own oil and gas reserves can remain financially viable for as long as possible,” it concluded.
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