Azerbaijan, Pakistan to benefit from energy cooperation

In the realm of global energy dynamics, the potential for cooperation between Azerbaijan and Pakistan stands out as a promising avenue for mutual benefit. Azerbaijan, with its abundant energy resources, and Pakistan, grappling with a severe energy crisis, can find a win-win solution through strategic collaboration. This partnership could significantly alleviate Pakistan’s energy woes while enhancing Azerbaijan’s role as a key energy exporter.

Azerbaijan’s Energy Strengths

Azerbaijan, strategically located in the South Caucasus region, has transformed itself into a global energy powerhouse since gaining independence in 1991. The country’s substantial oil and gas reserves have been the driving force behind its economic growth, particularly following the discovery of the Shah Deniz gas field. Hydrocarbons constitute over 90% of Azerbaijan’s exports, with substantial investments in infrastructure ensuring reliable and secure energy supplies. The modernization of power plants and the rehabilitation of gas and electricity networks have further solidified Azerbaijan’s position as a stable energy supplier.

Additionally, Azerbaijan is looking towards the future with a strong focus on renewable energy. The country has significant potential in solar, wind, biomass, geothermal, and hydropower resources. This strategic vision includes commitments to reduce greenhouse gas emissions by 35% by 2030, reflecting Azerbaijan’s dedication to sustainable energy solutions.

Pakistan’s Energy Challenges

In contrast, Pakistan faces a critical energy crisis that hampers its economic growth and national security. This crisis is not due to a lack of resources but rather governance issues, financial constraints, and political reluctance to implement necessary reforms. Energy shortages have severely impacted industrial production, causing economic losses estimated at up to 4% of GDP. The frequent power outages have also led to social unrest and deterred investment in the country’s development.

Pakistan’s indigenous energy resources, such as natural gas, hydroelectricity, and coal, are rapidly depleting due to high consumption rates. By 2025, oil reserves are expected to be exhausted, and natural gas by 2030. The country’s energy sector suffers from transmission losses, widespread electricity theft, and significant financial deficits, all of which compound the crisis.
Pakistan is currently importing oil and petroleum products worth $2 billion approximately monthly, while the country is facing a severe shortage of foreign currency (dollars). The hike in fuel prices has caused high inflation and a sharp increase in poverty in Pakistan. It might lead to unrest and instability in the country.

Potential for Cooperation

Pakistan and Azerbaijan enjoy extremely friendly relations. Both are majority Muslim nations, have historically kept close ties with cultural and traditional links going back to the pre-Islamic era. Relations at the diplomatic and political level are excellent. Both countries are having close cooperation in trade, education, defence, agriculture, tourism and many other spheres. Huge good will exists among the people of each country. Both countries complement each other’s weakness and benefit from each other’s strengths in the best possible manner.

Given these contrasting scenarios, cooperation between Azerbaijan and Pakistan presents a compelling opportunity for both nations. Here’s how a strategic partnership could unfold:
Energy Supply and Infrastructure Development; Azerbaijan can export surplus energy to Pakistan, providing a stable supply of oil and gas. This would help Pakistan bridge its energy deficit, ensuring consistent power for industrial and domestic use. Joint ventures in developing energy infrastructure, such as pipelines and storage facilities, can enhance the efficiency of this supply chain.

Technical Expertise and Investment: Azerbaijan’s experience and expertise in modernizing energy infrastructure can be invaluable to Pakistan. Collaborative projects could involve upgrading Pakistan’s energy networks, reducing transmission losses, and curbing electricity theft. Azerbaijani investment in Pakistan’s energy sector can also stimulate economic growth and create jobs.

Renewable Energy Development: Both countries can benefit from joint ventures in renewable energy. Azerbaijan’s emerging renewable sector can serve as a model for Pakistan, which aims to acquire 5% of its energy from renewable sources by 2030. Collaborative research and development in solar, wind, and hydropower projects can accelerate this transition.
Policy and Governance Reforms: Azerbaijan can share its governance models and strategies that have successfully managed its energy sector. This includes lessons on regulatory frameworks, financial management, and the integration of renewable energy sources.

Diplomatic and Economic Benefits

This cooperation extends beyond mere economic transactions. Strengthening energy ties can pave the way for broader diplomatic relations, fostering regional stability and cooperation. It also aligns with both nations’ strategic interests, contributing to their long-term economic and environmental goals.

The potential for energy cooperation between Azerbaijan and Pakistan is immense. By leveraging Azerbaijan’s energy surplus and Pakistan’s urgent needs, both countries can forge a partnership that addresses immediate challenges and lays the foundation for sustainable growth. This collaboration promises not only to alleviate Pakistan’s energy crisis but also to enhance Azerbaijan’s influence as a global energy leader. Through strategic investments, technical exchange, and mutual commitment to renewable energy, Azerbaijan and Pakistan can achieve a symbiotic relationship that benefits their economies and contributes to regional stability.

Reference Link:- https://gsrra.com/2024/05/23/pakistan-saddened-with-the-sudden-death-of-iranian-president-and-foreign-minister/