Azerbaijan could prove a winner as the war in Ukraine continues to reshuffle the Caspian Basin energy-supply deck. But uncertain investment and financing prospects, as well as questions about production capacity, are holding Baku back at present. When it comes to oil exports, it seems Kazakhstan’s pain can be Azerbaijan’s gain. Before the Kremlin’s unprovoked invasion of Ukraine in 2022, Kazakhstan relied on Russia for transiting the bulk of its oil exports to market.
Azerbaijani officials say that the sizeable investment required to expand export routes cannot be made until European gas buyers commit to buying the extra gas carried by expanded pipelines. Gas buyers for their part are concerned that Azerbaijan will be unable to supply all the required gas. The slow expansion of Azerbaijan’s own gas production has been an issue for would-be European importers.