BAKU, Aug. 25 (Xinhua) -- German Chancellor Angela Merkel said here on Saturday that Azerbaijan is an important country for the European Union to diversify its energy supply.

After arriving in Baku for an official visit, Merkel met with the Azerbaijani President Ilham Aliyev and held a meeting with local and German businessmen at the Heydar Aliyev Center in the capital.

According to her statement during the meetings, she commended the diversification of Azerbaijan's economy and said the extensive diversification of the German economy creates the basis for good cooperation between the two countries.

"Today we've had an intensive exchange of views on bilateral relations. We also discussed Azerbaijan's relations with the European Union," state-run news agency AZERTAC quoted the German chancellor as saying.

Merkel said that more than 150 German companies operate in Azerbaijan.

"Azerbaijan is in the process of modernization, and the diversification of the economy is our main priority," Aliyev said, adding that the country aims to develop its non-oil sector, including such areas as agriculture, tourism, ICT, infrastructure and construction.

"I am sure that new contracts will be signed and a new format of cooperation will be created as a result of today's talks," he said.

Merkel is on a three-day trip to the South Caucasus region.

Germany is among top trading partners of Azerbaijan. Trade turnover between the two countries exceeded one million U.S. dollars in 2017.