Since the independence, Azerbaijan has been one of the key countries of the Caspian region exporting crude oil to the global energy market. However, discovery of the vast natural gas reserves on Azerbaijan’s offshore territory, beginning of negotiations between Turkmenistan and Azerbaijan to establish a legal framework for constructing the Trans-Caspian Pipeline and the recent transit gas agreements signed between Azerbaijan and Turkey have turned Azerbaijan into a major natural gas exporting country. Nowadays, natural gas supply to the European markets through the Southern Gas Corridor is the main focus of Azerbaijan’s energy policy. The Southern Corridor being part of the energy diversification policy is the only westward route for the exporting hydrocarbons recourses from the Caspian Sea, which is aimed to break Russia’s monopoly in the European gas markets. Indeed, the natural gas supply, by creating a long-term linkage and increasing interdependency between suppliers and consumers, makes the process more vulnerable from the political point of view. The export of hydrocarbon resources from the Caspian Sea to Europe is challenged by certain factors such as geopolitical interests of Russia and Iran, competing pipeline projects, changes within the supply routes and technical challenges. By pursuing multi-dimensional energy policy, Azerbaijan has taken a cautious and balanced approach aimed to avoid any direct confrontation with Moscow in the realization of the Southern Gas Corridor. In this case political interests along with economic interests play very important role in defining the priorities within the long-term energy projects. This paper elaborates Azerbaijan’s natural gas supply policy to European gas markets and focuses on certain factors shifting security dynamics within the Southern Gas Corridor.
