Azerbaijan has extensive natural gas reserves of 2.4 trillion cubic meters (around 1.4 percent of global reserves), and its reserves-to-production ratio is among the highest in the world, indicating the potential for increased production, Report informs referring to a survey by the World Bank (WB).
“As such, the industry represents a more durable source of economic activity and revenue for Azerbaijan than oil, although gas revenues are much smaller than those from oil. In addition, it also may facilitate the development of a hydrogen industry in Azerbaijan,” the bank’s economists noted.
Natural gas emits roughly half of the CO2 emissions of coal, thus has better prospects than other fossil fuels: “As a result, its demand is likely to remain near current levels or even increase in the future, with demand from Asia in particular expected to rise.”
Reducing domestic consumption of natural gas would enable Azerbaijan to increase natural gas exports, the WB noted. Additionally, the ongoing reduction in the cost of wind and solar technologies makes investment in renewables attractive, especially compared to those in the oil and gas industry.
“Increased electricity generation from renewables would offer the potential to increase exports of zero-carbon electricity, which may command a price premium if carbon-pricing becomes more widespread. Furthermore, renewable energy can be used to produce green hydrogen, another potential opportunity for Azerbaijan,” reads the report.
Azerbaijan has significant wind and solar potential. According to the Ministry of Energy, Azerbaijan has technical solar potential of around 23,000MW, 3,000MW of wind potential, and more than 500MW of hydropower potential, although the amount that is currently economically viable at current prices is smaller.