Azerbaijan Begins Gas Supply to Austria and Germany

In January 2026, the Azerbaijan State Oil Company (SOCAR) officially began supplying natural gas to Austria and Germany, marking a significant milestone in diversifying Europe's energy supply. This gas is transported via the Trans-Adriatic Pipeline (TAP), signifying Azerbaijani gas's first entry into the Central European market.

This brings the total number of countries purchasing Azerbaijani gas to 16, significantly enhancing the value of the Southern Gas Corridor. Against the backdrop of Europe seeking to reduce its dependence on Russian energy, this energy corridor connecting the Caspian Sea and Europe is playing an increasingly important role.

01 Restructuring of the European Energy Landscape

Following the outbreak of the Russia-Ukraine conflict in 2022, Europe's energy security strategy underwent a fundamental shift. The EU decided to gradually cease importing Russian natural gas by 2027, creating a significant supply gap.

Data shows that in 2023, EU imports of Russian natural gas had decreased by 89% compared to pre-war levels, while crude oil and petroleum products decreased by 92%. This dramatic change has forced Europe to accelerate the search for alternative energy sources.

Austria, as a country traditionally reliant on Russian natural gas, is actively adapting to this new reality. In October 2025, Austria's natural gas imports increased by 10.5% year-on-year, but its net imports decreased by 21.7%.

This change stems from a restructuring of Austria's energy supply routes—after ceasing to receive natural gas through the Baumgarten hub, Austria shifted to increasing imports via routes through Western Europe.

Germany's situation is similarly representative. In 2025, Germany's natural gas imports increased by 19.3% year-on-year, with Norway (44%), the Netherlands (24%), and Belgium (21%) being its main suppliers. Liquefied natural gas (LNG) now accounts for 10.3% of Germany's energy mix.

02 The Strategic Value of the Southern Gas Corridor

The Trans-Adriatic Pipeline (TAP), the European segment of the Southern Gas Corridor, is approximately 878 kilometers long. It connects the Kypa region on the Turkish-Greek border, traverses Greece, Albania, and the Adriatic Sea, and finally reaches southern Italy.

The TAP pipeline has an initial capacity of 10 billion cubic meters per year, but has the potential to be expanded to 20 billion cubic meters per year. This pipeline connects with the Trans-Anatolian Pipeline (TANAP), forming a complete supply chain linking Azerbaijan's Caspian gas fields with the European market.

As of early 2026, the TAP pipeline had delivered over 54 billion cubic meters of natural gas to Europe. From January 2026, TAP further expanded its transmission capacity under a new gas transport agreement, providing additional long-term gas services.

The Southern Gas Corridor is not only an energy corridor but also an economic link. A representative of the European Commission pointed out that the TAP project has not only enhanced the stability of the European energy market but also promoted economic growth in transit countries such as Greece and Italy, created jobs, and strengthened regional integration.

03 Azerbaijan's Energy Ambitions

As an energy producer, Azerbaijan is actively expanding its influence in the international energy market. In 2025, Azerbaijan's natural gas production reached 51.5 billion cubic meters, of which the Shahdeniz gas field contributed 27.9 billion cubic meters.

In the same year, Azerbaijan exported 12.8 billion cubic meters of natural gas to Europe, accounting for more than half of its total exports.

Azerbaijan's energy strategy is not limited to expanding natural gas production but also includes developing renewable energy. President Aliyev stated that by 2030, Azerbaijan plans to increase its installed renewable energy capacity to 65 gigawatts, accounting for more than 35% of the national energy grid.

The Baku Energy Week, held in June 2025, became an important platform for Azerbaijan's energy diplomacy, attracting 267 companies from 39 countries. This event demonstrated Azerbaijan's transformation from a traditional energy supplier to a comprehensive energy partner.

While expanding its European market, Azerbaijan is also setting its sights on the Middle East. In August 2025, Azerbaijan began supplying natural gas to Syria via a Turkish pipeline, with an initial supply of 1.2 billion cubic meters. This move demonstrates Azerbaijan's determination to enhance its regional energy influence.

04 Regional Impacts of Energy Interconnectivity

The entry of Azerbaijani gas into the Austrian and German markets further strengthens energy interconnectivity in Central and Eastern Europe. Austria has significantly increased its re-export trade of gas to Eastern European countries such as Hungary.

By 2025, Austria's gas shipments to Hungary via the Mosson Magyarvar export point will increase substantially.

This interconnectivity enhances regional energy resilience. As the Southern Gas Corridor extends into the Balkans, countries such as North Macedonia are actively seeking to purchase Azerbaijani gas directly through long-term contracts.

A new interconnecting pipeline connecting Serbia is under construction, with a total length of 66.5 kilometers and an expected annual transport capacity of 1.4 billion cubic meters, scheduled for completion in 2027.

The expansion of energy infrastructure is changing regional energy dynamics. North Macedonia plans to phase out coal-fired power plants, anticipating a significant increase in gas demand, with Azerbaijani gas playing a central role in this network.

These changes demonstrate how energy supply diversification promotes regional economic transformation and energy security.

05 Challenges and Prospects

While Azerbaijani gas holds promising prospects in the European market, it also faces numerous challenges. Pipeline expansion requires substantial infrastructure investment, and there are internal disagreements within the EU regarding gas imports, particularly in the context of the green energy transition.

Azerbaijan aims to increase its gas exports to Europe to 20 billion cubic meters per year by 2027. However, achieving this goal requires overcoming technical, financial, and political obstacles.

High gas export costs are another major challenge. Although Azerbaijani gas wellhead break-even prices are low, export costs to Europe exceed $6 per thousand cubic feet, weakening its price competitiveness.

Furthermore, pipeline gas lacks flexibility and is at a disadvantage when competing with liquefied natural gas (LNG).

Nevertheless, Azerbaijan is actively pursuing its energy strategy. In 2025, SOCAR signed a 10-year contract with Germany's SEFE company to gradually increase annual exports to Germany to 1.5 billion cubic meters.

Green energy initiatives such as the Black Sea submarine cable project demonstrate that Azerbaijan is seeking a balance between traditional oil and gas exports and a transition to renewable energy.

As the Southern Gas Corridor continues to expand, the European energy landscape is quietly being reshaped. Companies in Hungary and Slovakia are negotiating agreements with Azerbaijan to replace Russian gas transported via pipelines through Ukraine. These efforts could ultimately help Europe completely sever its decades-long gas ties with Russia.

For European countries like Austria and Germany, Azerbaijani gas is not just an energy source, but a strategic choice. The European energy landscape is shifting from reliance on a single supply source to a more diversified, resilient, and integrated supply system.