Azerbaijan and Turkey Sign New Gas Agreement: A Caucasian Energy Artery and a New Geopolitical Landscape in Eurasia

On January 2, 2026, Azerbaijan and Turkey signed a landmark gas supply agreement. According to a statement by Turkish Energy and Natural Resources Minister Arpaslan Baghraktar, the agreement secures a gas supply of up to 33 billion cubic meters.

The agreement stipulates that for the next 15 years, starting in 2029, Azerbaijan will supply 2.25 billion cubic meters of natural gas annually to Turkey from its Absheron gas field in the Caspian Sea via the Baku-Tbilisi-Erzurum pipeline.

01 Core of the Agreement: A Fifteen-Year Energy Contract

Two days after the signing of the agreement, the Turkish Energy Minister released the specific details to the media. “Two days ago, we signed a new gas supply agreement with Azerbaijan, covering the supply of 33 billion cubic meters of natural gas,” Baghraktar stated clearly.

This long-term contract not only involves a massive energy transaction but also clearly defines a specific timetable and pathway. “Over the next 15 years, 2.25 billion cubic meters of natural gas will be transported annually from the Absheron gas field in the Caspian Sea. The agreement will take effect in 2029 and remain valid until the 2040s.”

The transport route relies on existing, well-established energy infrastructure. “We will utilize existing infrastructure to transport this natural gas to our country via the Baku-Tbilisi-Erzurum pipeline,” he added.

02 Turkey's Energy Strategy: A Key Step Towards Diversification

As a major energy consumer, Turkey has an extremely high dependence on foreign energy. Data from 2025 shows that Turkey will import approximately 99% of its natural gas and 93% of its oil.

Against the backdrop of the ongoing Russia-Ukraine conflict and the instability of traditional energy supply patterns, ensuring energy security has become a top priority in Turkey's national strategy. Deepening energy cooperation with Azerbaijan is a key measure for Turkey to reduce its dependence on a single energy source.

Bayraktar emphasized the strategic significance of this move when announcing the agreement but did not disclose the specific pricing mechanism. Industry analysts believe that the long-term agreement will help Turkey lock in relatively stable supply prices and hedge against the risks of fluctuations in the international energy market. 03 Azerbaijan's Strategic Expansion: Energy Ambitions from the Caspian to the Mediterranean

As a major energy producer in the Caspian region, Azerbaijan has been committed to expanding its energy export channels and geopolitical influence in recent years. The Absheron gas field is one of Azerbaijan's key oil and gas fields in the Caspian Sea, and the signing of this long-term supply agreement provides a stable market for the country's energy exports.

By strengthening its energy ties with Turkey, Azerbaijan not only secures a long-term and stable source of fiscal revenue but also reinforces its position as a regional energy hub. Azerbaijani natural gas, via Turkey, can be further transported to the European market, enhancing its importance in the European energy supply chain.

Previously, Azerbaijan supplied gas to Europe through the Southern Gas Corridor project, and this new agreement with Turkey further solidifies the foundation of the trans-Anatolian energy artery.

04 Baku-Tbilisi-Erzurum: The Caucasian Energy Artery

The Baku-Tbilisi-Erzurum pipeline, the route specified in this agreement, is not only a physical energy corridor but also a geopolitical link connecting the South Caucasus region.

The pipeline originates in Baku, the capital of Azerbaijan, passes through Tbilisi, the capital of Georgia, and finally reaches Erzurum in eastern Turkey, with a total length of over 690 kilometers. Since its operation began in 2006, it has become one of the important channels for transporting Caspian Sea natural gas.

This pipeline not only strengthens the economic ties between Azerbaijan, Georgia, and Turkey but also enhances the strategic importance of the entire Caucasus region. As an energy corridor bypassing Russia and Iran, it occupies a unique position in the Eurasian energy geopolitics.

05 Regional Geopolitical Impact: Energy Flow and Power Balance

The signing of this agreement will further consolidate the strategic partnership between Turkey and Azerbaijan. Cooperation between the two countries in energy, military, and diplomacy is becoming increasingly close, forming a significant power dynamic in the Caucasus and Anatolia region.

For Georgia, as a transit country for the pipeline, it not only gains stable transit revenue but also enhances its geopolitical value between East and West. Its energy transit status has become a crucial bargaining chip in Georgia's national security and foreign policy.

Furthermore, this agreement may affect the overall balance of power in the Caucasus region. Armenia, a historical rival of Azerbaijan and a country with strained relations with Turkey, is cautious about the agreement, fearing a further shift in the regional power balance towards Azerbaijan and Turkey.

06 Global Energy Landscape: A New Variable for European Energy Diversification

Against the backdrop of the EU's pursuit of energy supply diversification and reduced dependence on Russia, the importance of Caspian Sea natural gas resources is increasingly prominent. Azerbaijan's gas supply to Europe via Turkey is expected to be further secured and potentially increased by this agreement.

By 2025, the EU's natural gas imports from Azerbaijan have doubled compared to 2021, reaching approximately 12 billion cubic meters. The European Commission previously stated its plan to increase Azerbaijani gas imports to 20 billion cubic meters per year by 2027.

This new agreement provides further possibilities for achieving this goal. Azerbaijani gas, flowing through Turkey to Southern European countries such as Greece and Italy, is becoming an important part of the Southern European Energy Corridor.

07 Great Power Perspective: Energy Cooperation and Geopolitical Competition

Regarding Russia, although there has been no official comment on the agreement, analysts believe that Russia will closely monitor the impact of Caspian energy flows on the traditional European energy supply pattern. While maintaining its market share in Europe, Russia is also seeking to diversify its energy exports.

Regarding Iran, as a Caspian littoral state and a regional power, it has expressed concern about the deepening energy cooperation between Azerbaijan and Turkey. The legal status of the Caspian Sea and the issue of resource demarcation remain important topics among regional countries.

From the perspective of Europe and the United States, Azerbaijan is seen as an important alternative energy supplier, and they support the expansion of the Southern Gas Corridor, viewing it as a key project to enhance European energy security and geopolitical autonomy.

08 Future Outlook: Energy Transition and Geopolitical Challenges

The agreement will take effect in 2029, marking a new phase in the global energy transition. National commitments to carbon neutrality, advancements in renewable energy technologies, and the evolving role of natural gas in the global energy mix will all influence the agreement's actual implementation and value.

Regional security and stability are another key variable for the agreement's successful implementation. Geopolitical conflicts in the Caucasus region, particularly the Nagorno-Karabakh conflict and its aftermath, may impact the security of energy infrastructure and the atmosphere of regional cooperation.

Climate change and environmental protection issues will also affect the implementation of energy projects. The protection of the Caspian Sea ecosystem and environmental standards for pipeline construction will receive increased attention from the international community and regional countries.

This energy artery traversing the Caucasus Mountains between Azerbaijan and Turkey not only transports Caspian Sea natural gas but also embodies the economic aspirations and geopolitical strategies of regional countries.

Against the backdrop of the accelerating global energy transition and geopolitical landscape, this 15-year energy pact will become an important window into observing energy flows across Eurasia, the regional balance of power, and great power competition.