Azerbaijani Oil Fund Bets on Gold and Renewables in Strategic Overhaul

Jerusalem, 24 July, 2025 (TPS-IL) -- Baku (AZERTAC) – In recent years, the State Oil Fund of the Republic of Azerbaijan (SOFAZ) has implemented significant changes in its investment strategy. While the fund continues to rely primarily on oil and gas revenues, it is actively diversifying its portfolio, economist Khalid Karimli said in an interview with AZERTAC.

Karimli noted that at the end of 2023, bonds accounted for 58% of SOFAZ’s portfolio. However, by the first quarter of 2025, this figure had dropped to 42.6% – a decrease of approximately 15 percentage points in just 15 months. In contrast, gold investments saw a sharp increase, rising from 12% of the portfolio in 2023 to 25.8% in Q1 2025, effectively more than doubling.

Equity investments grew slightly from 24.3% to 24.8%, while real estate rose from 6% to 6.8% over the same period. Karimli emphasized that the most notable diversification trend has been in gold, largely due to its status as a reliable asset amid rising geopolitical and economic risks.

SOFAZ’s investment portfolio includes both stock market equities and direct stakes in foreign companies. A key example is its partnership with Enfinity Global to invest in renewable energy projects in Italy. This initiative aligns with SOFAZ’s strategy to prioritize real-sector investments and deepen economic ties with strategic partners like Italy.

Karimli highlighted the strategic rationale behind such investments: “Italy is a major buyer of Azerbaijan’s oil and gas, with exports delivered via the Trans Adriatic Pipeline (TAP). Our trade turnover with Italy ranks among the highest in the EU. Investing in alternative energy – a priority area in Europe’s future energy policy – is a smart strategic move.”

He added that EU subsidies and political support for the renewable energy sector further boost the long-term profitability and resilience of these investments.

Although oil and gas remain the primary revenue sources for SOFAZ, Karimli underlined that diversifying the investment portfolio and reducing risks through increased allocations to gold and the real sector are essential to the Fund’s long-term sustainability strategy.