Germany and Azerbaijan seek closer energy cooperation

Germany and Azerbaijan said on 21 July 2026 that they want to deepen cooperation on energy exports to Europe, with Azerbaijani President Ilham Aliyev calling for new European funding for gas pipeline projects.

German Chancellor Friedrich Merz received Aliyev with military honours at the chancellery in Berlin. At a joint press conference, Merz said Germany wanted to keep diversifying its energy supply with Azerbaijan.

The two countries signed a strategic agenda that includes cooperation on energy flows, including gas.

Azerbaijan has become a key energy supplier for Europe in recent years as countries seek alternatives to Russian oil and gas during the ongoing war in Ukraine. Energy supplies have also been affected by the Iran war and its impact on naval traffic through the Strait of Hormuz.

Aliyev said Azerbaijan would need new interconnections, new gas pipelines and investment funds to supply more gas. Baku began delivering gas to Berlin earlier this year.

Aliyev said the Trans Adriatic Pipeline and the Trans Anatolian Pipeline, which carry gas from Azerbaijan to Europe through Georgia and Turkey, are operating at full capacity. He said the capacity of the Trans Adriatic Pipeline could be doubled, but only with large investment.

The European Investment Bank decided in 2019 to stop financing fossil fuel projects and focus on cleaner energy. Aliyev said European banks should reconsider those decisions, citing what he called the worsening situation in the Middle East and the fact that some Russian refineries had been destroyed or put out of service.

The report said the Iran war has caused export problems for major producers including Qatar and has sharply increased gas prices. A forecast by Germany's Ifo economic institute, published before renewed strikes between the United States and Iran in early July, said the rise in fuel prices caused by the closure of the Strait of Hormuz would reduce German GDP growth by 0.4 percentage points in both 2026 and 2027.