11/12/2012 11:52 GMT | Updated 10/02/2013 05:12 GMT

Securing the UK's Energy Needs and Allies in Europe's East

Europe's energy demands are changing. They grow more complex each day. The players powering the continent are changing too. Where once Russia supplied Central and Eastern European needs now new players from the Caspian basin, notably Azerbaijan, also feed their growing hunger. Not only does diversification drive a more competitive energy market, it also strengthens political and trade ties with the emerging economies in the Europe's near abroad and promotes energy security.

Mitteleuropa has long been susceptible to energiepolitik: several spats between Russia and Ukraine led to supply disruptions and price shocks amongst their neighbours as the bear and the gyrfalcon turned off their taps. The historic lack of competition in gas supply and of the necessary transport and transmission infrastructure has inhibited the development of a secure energy landscape at the heart of the EU.

Step forward Azerbaijan. The country has the potential to become one of Europe's major allies and suppliers. It is one of the most stable energy players in the region and is fast developing into a hub for the Caspian Sea basin and Central Asia's oil and gas. Its reach now extends beyond its grasp - beyond countries like Georgia and Turkey to key EU member states such as Germany and Italy.

This summer, that reach extended a little further as the BP-led Shah Deniz consortium announced that it had narrowed the prospective pipeline routes to carry gas from the Caspian to Europe to just two options: - Nabucco West to carry gas across Turkey through Bulgaria, Romania and Hungary to Austria's Central European gas hub and the Trans-Adriatic Pipeline (TAP) to traverse Greece and Albania, connecting into the heel of Italy's boot.

The route decision is expected in early 2013. Without doubt either option will be welcomed by those in Europe who want to see a more competitive and diverse gas market that is currently dominated by petro-powers that are happy to use their energy muscle as the strong arm of their foreign policy.

Britain is in pole position to help Azerbaijan develop its abundant resources and promote its potential power pipeline. British companies, such as BP, benefit from Azerbaijan's emerging role in the European energy market. The oil giant has been in the country for 20 years now and is currently the country's largest investor. Admittedly some harsh words have been recently exchanged about BP's performance in meeting its extraction targets but they should not be permitted to sour an otherwise sweet relationship. Words are cheap diplomatic currency. Action is what matters.

Azerbaijan already profits from our know-how and technology borne out of decades of North Sea oil and gas exploitation. Such cooperation opens the door to opportunities in other business areas such as telecoms, construction and financial services. Azerbaijan may be a small country. It may be far away. Yet it presents enormous potential for Britain if we continue to invest and in its economic and civic development. We should take a lead and grab it whilst Azerbaijan still looks west, not east.